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What is meant by hidden goodwill in a retirement settlement?
AGoodwill already shown in the books
BGoodwill written off before retirement
CPayment above the adjusted capital balance
DGoodwill valued by capitalising profits
Answer & Solution
Correct answer: C. Payment above the adjusted capital balance
When a lump sum exceeds the adjusted capital balance, the surplus is taken to be his share of goodwill that was never recorded.
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