Goodwill
The Most Unique Intangible Asset
Goodwill arises only in a business combination when the purchase price exceeds the fair value of the identifiable net assets acquired. Goodwill represents expected future economic benefits such as reputation, customer loyalty, and workforce value that cannot be separately identified.
Goodwill = Purchase Price − Fair Value of Identifiable Net Assets
- Recognized only through acquisition.
- Not internally generated.
- Considered an indefinite-life asset.
- Not amortized under U.S. GAAP.
Summary
Goodwill represents the premium paid in acquiring a business and is not amortized.