Goodwill is an intangible asset that represents the reputation, customer base, brand value, and other non-physical attributes of a business. During the dissolution of a partnership, the assets and liabilities are settled among the partners. The Realisation Account is used to record the disposal of various assets and the settlement of liabilities.

When the partnership dissolves, the goodwill is generally sold to a new firm or partner, and the amount realized from its sale is credited to the Realisation Account. This amount is then distributed among the partners according to their profit-sharing ratio or as agreed upon during the dissolution process. Hence, the goodwill is transferred to the credit side of the Realisation Account.