Select the factors affecting the value of goodwill-(A) Nature of business.(B) Efficiency of management.(C) Location.(D) Prices.Choose the correct answer from the options given below:
- A\text{(A), (B) and (D) only}
- B\text{(A), (B) and (C) only}
- C\text{(A), (C) and (D) only}
- D\text{(B), (C) and (D) only}
Solution & Step-by-step Explanation
Goodwill is an intangible asset that reflects the reputation and super earning capacity of a firm. The primary factors influencing its estimation include:(A) Nature of business: Stable or high-demand product lines foster higher goodwill.(B) Efficiency of management: Competent managers improve profitability, boosting goodwill.(C) Location: Centrally located, high footfall premises enhance reach and value.Macroeconomic price fluctuations or day-to-day item prices (D) do not serve as direct intrinsic determinants of long-term business structural goodwill. Hence, (A), (B), and (C) are the correct elements.