Goodwill

Goodwill, in the accounting sense, refers to the difference between the total value of a business and the value of its net assets in its balance sheet. It represents the ability of the business to generate profits and cash in the future. The value of goodwill is often only determined when a business is bought or sold. Acquired goodwill (the difference between the purchase price for a business and its net assets, is amortised through the profit and loss account.

 

reference: Business Studies / Accounting. Accounts & Finance Glossary. Jim Riley BA(Hons) MBA FCA // tutor2u

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