Goodwill is the excess of the cost to acquire another company over the sum of the fair value of its net assets.

Question

Quizplus · Accepted Answer

This is a correct definition of goodwill. It represents the value of intangible assets, such as brand reputation, customer relationships or intellectual property, that are not reflected in the balance sheet but are considered to be valuable for the success of the business. Goodwill is recorded as an asset on the balance sheet and is subject to annual impairment testing, which means that if it loses value over time, it needs to be written down.

Goodwill Is the Excess of the Cost to Acquire Another