Goodwill
An intangible asset that arises when a buyer acquires an existing business, representing the value of the brand, customer base, and other non-tangible factors.
Implications
An intangible asset that represents the value of a company's brand, customer relationships, reputation, and other non-physical assets that contribute to its profitability, often recognized in accounting when a company is acquired for more than the fair value of its tangible assets.
Example
Example: A retail chain acquires a smaller competitor for a price that exceeds the value of its physical assets, recognizing the excess as goodwill on its balance sheet, reflecting the value of the competitor�s brand and customer loyalty.
Related Terms
Different from tangible assets like property or equipment, goodwill is intangible and reflects the premium paid for a company�s non-physical strengths, such as its reputation, customer base, and market position.
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