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.


Share it:  Cite

More from this Section

  • Right of stockholders
    Stockholders have the right to Vote in election of board of directors at annual meeting ...
  • Aggressively
    Aggressively used in context of general equities. For a customer it means working to buy ...
  • Registered bond
    Registered bond refers to corporate or governmental debt in a bond form in which the owner’s ...
  • Cost behavior analysis
    Cost behavior analysis is the study of how specific costs respond to changes in the level ...
  • Inventory investment
    Inventory investment is the spending by firms on additional holdings of raw materials, ...