A: Goodwill is valued when there is a change in the profit-sharing ratio. R: The change in ratio means some partners sacrifice and some gain, requiring compensation. Choose the correct option.
A.Both A and R are true and R is the correct explanation of A
B.A is false but R is true
C.Both A and R are true but R is NOT the correct explanation of A
Explanation:
Goodwill is valued during admission, retirement, death, or change in profit-sharing ratio. This is because partners who sacrifice their share must be compensated by those who gain. R correctly explains the reason for valuation.
Explanation:
Goodwill is indeed an intangible asset. However, by definition, intangible assets lack physical substance. Therefore, goodwill does not have a physical existence. A is true, R is false.
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