Final answer:
Goodwill is recognized as an asset of the partnership under the goodwill method when a partner's intangible contributions are factored into the partnership's value.
Step-by-step explanation:
Under the goodwill method for recognizing a partner's intangible contribution, goodwill is recognized as an asset of the partnership to reflect the intangible contribution.
When a new partner is admitted into an existing partnership and the value of the partnership is deemed to be higher than the sum of the individual assets minus liabilities, this excess value is attributed to goodwill, which is an intangible asset.
The value of goodwill is then written up in the partnership's books, and often, the new partner is required to contribute capital that reflects the proportionate share of this goodwill valuation.