Pinned John Hay In: Category - Accounting InterviewsIs goodwill a fictitious asset?fictitious assetgoodwill ShareFacebook1 AnswerVotedRecent Aastha 2020-08-10T05:06:24+05:30Added an answer on August 10, 2020 at 5:06 am This answer was edited. No, Goodwill is not a fictitious asset.What is Good Will?Goodwill of an entity is an intangible asset. It can be said that it’s the excess amount an entity is liable to pay when it purchases all the assets at a price higher than its fair market value of another entity. The purchasing entity is willing to pay the higher amount reasons such as brand image, modernised technology, high-grade employee relationships etc.The goodwill is valued at the time of the merger of two or more entities or acquisition of one by another entity.It is generally noticed that better the organisation’s reputation higher is the value of goodwill.What is a Fictitious Asset?Fictitious means “Bogus” or “Untrue” and asset means anything beneficial for the organisation. Thus fictitious assets are not an asset but just the expenses or losses which can not be accounted for in the current reporting period rather are to be written off in the future reporting period.For Example,Preliminary ExpensesMiscellaneous ExpensesLoss on Issue of DebenturesDiscount on Share Issue. Why is goodwill not a fictitious asset?Goodwill is an intangible asset and not a fictitious asset. A fictitious asset does not have a realizable value as it is merely an expenditure incurred by the company. It does not have a tangible existence either. Whereas goodwill has a monetary value i.e it has a realizable value even though it has no tangible existence. Hence, it’s an intangible asset.Goodwill is presented in a balance sheet as –Aastha.0Reply Share ShareShare on FacebookShare on TwitterShare on LinkedInShare on WhatsAppLeave an answerCancel replyYou must login or register to add a new answer.