What is goodwill in business and how is it calculated? Provide examples.

Question

ScanSolve AI Tutor · Accepted Answer

Here are the answers to your questions:

Q7. A goodwill of a business can be best described as the

C. difference between the price of the business sold and its net asset

Q8. Why would a manager be interested in finding out information about his business?

C. security & profitability

Q9. The type of business that has limited liability is called

C. company

Q10. Capital needed to start-up the business comes from the,

D. owner

Q11. Jenny started a small business with her uncle. After a month, they made a good profit. They shared the profit equally as agreed. What type of business is this?
This type of business is a partnership.

Q12. A man sells his business for K80,000 and the value of his net asset is K43,000. What is the goodwill of that business? (show your working out)

Identify the formula for goodwill.
Goodwill = Selling Price - Net Asset Value
Substitute the given values into the formula.
$\text{Goodwill} = \text{K}80,000 - \text{K}43,000$
Calculate the goodwill.
$\text{Goodwill} = \text{K}37,000$
The goodwill of the business is $\boxed{\text{K}37,000}$ .

For questions 13-17, refer to the bar graph below:

Q13. Which commercial activity has a great concern for the environment?
The commercial activity with the greatest concern for the environment is Industrial Waste.

Q14. What are the 2 business activities that caused least damaged to the environment?
The 2 business activities that caused the least damage to the environment are Gardening and Human waste.

Q15. Which activity caused huge mutilation to the environment?
The activity that caused huge mutilation to the environment is Industrial Waste.

Q16. The activity that does not have a great concern about the environment is called _____.
The activity that does not have a great concern about the environment is Gardening.

Q17. What is the total percentage caused by business activities that has least & great impact on the environment? (Show calculation)
Identify the activity with the least impact and its percentage.
Least impact: Gardening = 4%
Identify the activity with the greatest impact and its percentage.
Greatest impact: Industrial Waste = 63%
Add the percentages together.
$\text{Total percentage} = 4\% + 63\% = 67\%$
The total percentage caused by business activities that have the least and greatest impact on the environment is $\boxed{67\%}$ .

What is goodwill in business and how is it calculated? Provide examples.

Step-by-step solution

Identify the formula for goodwill.

Substitute the given values into the formula.

Calculate the goodwill.

Identify the activity with the least impact and its percentage.

Identify the activity with the greatest impact and its percentage.

Add the percentages together.

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