Features of Goodwill

Goodwill can be defined as the excess of book value of assets and liabilities and often needed in case of mergers and acquisitions. In simple words it can be defined as the probability of old customers who are satisfied with the services of the company returning back for future purchases.

Here are some of the features of goodwill –

1. It is an intangible asset implying that it is one cannot be seen or touched like land or building but it has certain value attached to it.

2. The value of goodwill is highly dependent on the person who is valuing the goodwill, in other words it is subjective in nature. Also it is difficult to assign a particular value to goodwill because it keeps on fluctuating on the basis of company’s performance.

3. It is dependent on various factors like location of the company, relationship with the suppliers, long term contracts of the company with customers etc….

Goodwill is considered to be primary reason for many mergers and acquisitions because goodwill brings customers to the acquiring company almost without any effort, though acquiring company has to pay price for goodwill.

2 comments… add one
  • David wambua

    Quite explanatory.thanks.

Leave a Comment


Related pages


pros and cons of traditional economydisadvantages of economic growthdepreciation declining balance methodmarket skimming and market penetration pricing strategiesdifference between hire purchase and installmentdefinition of skimming pricingwhat is urbanisation for kidscheque crossed generallyprivate goods exampleswhat is a normal good and an inferior gooderror of omission in accounting examplehorizontal analysis of a balance sheetcountries with planned economiesdefine materiality in accountingdisadvantages of dictatorshipinferior and normal goodsdifference between shares and debentures and bondswhat is the difference between tariffs and quotascapital account convertibility pptdisadvantages of a cashless societyadvantages and disadvantages of payback periodskimming pricing advantages and disadvantageswhat is a indirect quotationunitary elasticity of demand examplewhat consignee meanspitfalls of capitalismwhat is a autocratic leaderwholesale banking vs retail bankingthe disadvantages of socialismdisadvantages of economic globalizationdifference between job and process costingdirect quote and indirect quote foreign exchangeadvantages and disadvantages of invoice discountingdifference between complimentary and complementarywhat is a profitability ratioobjectives of demat accountsystematic and non-systematic riskunitary elastic demand examplefixed capital meaningbenefits of autocracycharacteristics of monopolistic competitionjit production advantages and disadvantagescharacteristics of job costingunsystematic riskassest meaningwhat are the advantages of socialismeconomics complements and substitutesexamples of unitary demandfutures advantages and disadvantagesforeign exchange reserves of india meaningexamples of primary industryadvantages and disadvantages of financial leveragesemi durable goods exampleshypothecation of goodsmarket economy characteristics advantages disadvantagesjournal entry for bills receivabledefinition of conglomerate in economicsstrengths and weaknesses of market economyinvestment appraisal payback periodadvantages of process costingsales return journal entrywhat is leverage ratiosconsignee consignorforfeiting meaningdefine contingent liabilitiesmeaning of unclaimedtypes of financial guaranteesjournal entry prepaid expensedirect vs indirect quotesthe balance in the prepaid rent accountinformative report of demat accountdupont analysis chartexplain barter systemrrb regional rural bankjournal entries for unearned revenuedefinition traditional economytypes of factoringmoil ipo price