GOODWILL

Goodwill

Goodwill arises when one company acquires another, but pays more than the fair market value of the net assets . It is classified as an intangible asset on the balance sheet. However, according to International Financial Reporting Standards, goodwill is never amortized. Instead, management is responsible to value goodwill every year end to determine if an impairment is required. If the fair market value goes below historical cost, an impairment must be recorded to bring it down to its fair market value. However, an increase in the fair market value would not be accounted for in the financial statements.

The above text is a snippet from Wikipedia: Goodwill (accounting)
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goodwill

Noun

  1. A favorably disposed attitude toward someone or something.
  2. The value of a business entity not directly attributable to its tangible assets and liabilities. This value derives from factors such as consumer loyalty to the brand.
  3. A concept used to refer to the ability of an individual or business to exert influence within a community, club, market or another type of group, without having to resort to the use of an asset (such as money or property), either directly or by the creation of a lien.


The above text is a snippet from Wiktionary: goodwill
and as such is available under the Creative Commons Attribution/Share-Alike License.

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