Accounting glossary
What is goodwill?
The premium paid for a business above the fair value of its identifiable assets — the price of its name, customers and momentum. Goodwill only arises when a business is bought; you cannot book your own.
Example
You buy a competitor's shop for $250,000 when its identifiable assets are worth $180,000. The $70,000 difference is goodwill — reputation, customer relationships, location.
Goodwill only appears on a balance sheet when it was purchased. The goodwill you built yourself, however real, is never recorded.
In SeroBooks
Recorded through controlled journal entries when an acquisition creates it. Journal entries guide →
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