goodwill

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goodwill

n. the benefit of a business having a good reputation under its name and regular patronage. Goodwill is not tangible like equipment, right to lease the premises, or inventory of goods. It becomes important when a business is sold, since there can be an allocation in the sales price for the value of the goodwill, which is always a subjective estimate. Included in goodwill upon sale may be the right to do business without competition by the seller in the area and/or for a specified period of time. Sellers like the allocation to goodwill to be high since it is not subject to capital gains tax, while buyers prefer it to be low, because it cannot be depreciated for tax purposes like tangible assets. Goodwill also may be overestimated by a proud seller and believed by an unknowing buyer. (See: sale)

goodwill

noun altruism, amity, benefaction, benevolence, brotherhood, charity, cheerful consent, cheerful willingness, commercial advantage, cordiality, countenance, customer approval, customer encourageeent, earnestness, established patronage, established popplarity, established reputation, favor, favorable disposition, favorable regard, friendly disposition, geniality, good name, good nature, good reputation, helpfulness, humanity, known name, munificence, patronage, philanthropy, proven name, public favor, public support, sponsorship, support, sympathy, tolerance, willingness
Associated concepts: impairment of good will, sale and transfer of good will

goodwill

the advantage or benefit that is acquired by the business beyond the mere value of its capital stock or property in consequence of the patronage it receives from its customers. For example, it is usual for a business to be sold on the basis of so much for the stock and so much for the goodwill. Goodwill can also be considered as the amount by which the value of the business as a whole exceeds the assets minus the value of the company's liabilities. In another sense, it is ‘the probability that the old customers will resort to the old place’.
References in periodicals archive ?
The company now has purchased goodwill costing pounds 30,000.
Discussions about the existence of purchased goodwill and how it should be treated are far from new.
The agreed terms reflect bargained values that should be accounted for including purchased goodwill.
Thus, although the goodwill is amortizable in X's hands, if X contributes its purchased goodwill to Z and Z is related to Y because Y has a greater-than-20% interest in Z, the goodwill contributed by X will cease to be amortizable goodwill; X, thus, will not obtain the benefit of amortizable tax basis.
Goodwill and amortisation Purchased goodwill (representing the
Although purchased goodwill is not in itself an asset, its inclusion among the assets of the reporting entity, rather than as a deduction from shareholders' equity, recognises that goodwill is part of a larger asset, the investment for which management remains accountable.
Instead purchased goodwill will remain on the balance sheet as an asset subject to impairment reviews.
Despite winning a higher sale price than expected, after expenses, overseas taxation and the reinstatement of pounds 50 million of purchased goodwill, McKechnie will have to book a loss on the transaction of pounds 10 million.
company capitalizing purchased goodwill and amortizing it over a 40-year period in accordance with U.
Moreover, the group's organic growth plans and acquisitions continue to be supported only by internal capital generation, which has the potential to weaken the group's risk-adjusted capital position, particularly through purchased goodwill.
This is the same procedure used for purchased goodwill, except it likely understates goodwill, since most acquirers pay a premium over the current share price.

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