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Definition

Goodwill

The largest intangible asset that appears on a company’s balance sheet is goodwill. Goodwill represents the value of all favorable attributes that relate to a company. These include exceptional management, desirable location, good customer relations, skilled employees, high-quality products, and harmonious relations with labor unions. Goodwill is unique: Unlike assets such as investments and plant assets, which can be sold individually in the marketplace, goodwill can be identified only with the business as a whole.


Goodwill is the excess of the purchase price paid for a firm over the book value received.  Recorded on the acquirers’ balance sheet.


Goodwill is an accounting entry to reflect value to the firm of its having special expertise or a particularly profitable business line.

 

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