What is Goodwill?

Goodwill is an accounting measure that refers to some of the intangible assets of a company. The difference between Intangible Assets and Goodwill is that the assets listed under Intangible Assets have an expiry point (contracts, trademarks etc.) whereas Goodwill assets never expire.

Some examples of Goodwill are:

  • Brand name
  • Customer loyalty
  • Proprietary production methods (i.e. the recipe formula for Coke).

Whenever a company is acquired for an amount higher than the book value, intangible assets and goodwill usually account for the difference.

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