Wednesday, 5 June 2013
Definition of 'Goodwill'
Generally speaking in accounting terms this is the amount paid over and above during a company acquisition.
An account that can be found in the assets portion of a company's balance sheet. Goodwill can often arise when one company is purchased by another company.
In an acquisition, the amount paid for the company over book value usually accounts for the target firm's intangible assets.
The goodwill is seen as an intangible asset on the balance sheet because it is not a physical asset like buildings or equipment. Goodwill typically reflects the value of intangible assets such as a strong brand name, good customer relations, good employee relations and any patents or proprietary technology.