In an economic sense, goodwill created in an acquisition represents blue sky, that is, the acquiring firm is essentially paying a premium for the purchase and getting nothing of value for this part of the price.

Question

Quizplus · Accepted Answer

Goodwill in an acquisition represents the excess of the purchase price over the fair value of the identifiable net assets of the acquired company. It reflects intangible assets such as brand reputation, customer relationships, and intellectual property, which are considered valuable assets and not "nothing of value."

In an Economic Sense, Goodwill Created in an Acquisition Represents