10 Goodwill and other intangibles
‘There’s a crazy amount of goodwill, and I don’t know where it came from...’
Feist, Canadian musician
In a nutshell
A company is typically worth more than the sum of its parts and the difference is because of goodwill. Goodwill is a hidden asset that exists because of factors such as reputation, location, market position, customer loyalty and employee expertise. Hidden goodwill is more precisely referred to as ‘inherent’ goodwill and it never appears in the company’s own balance sheet.
Goodwill is also considered a unique asset because, unlike other assets, it cannot be separated from the business to which it relates, i.e. it cannot be transferred or exist separately from the business. It is the DNA value ...
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