Talk:Goodwill (accounting)/Archives/2013

Goodwill only at purchase

Actually, under U.S. accounting rules (GAAP) only purchased goodwill can appear as an asset on the formal books (as the 10-K) statements of a company.

When a company is sold, then its goodwill is typically valued and included in the price-setting negotiations.

See entry on valuing intellectual property.

Gio

Removing opinionated comment

I'm taking this text out and rewording it because I think it's very opinionated:

Since in general intellectual property (IP) is part of goodwill, the most important asset of knowledge-based companies does not appear at all on formal balance sheets. But it is the IP that generates profit, not the buildings or the cash a company holds. IP is the product of all research, engineering, and marketing efforts that a company invests in. One effect of the failure to account for IP is that many ratios used to value companies can change greatly when meaningless physical assets are rearranged. The lack of documentation about the most significant asset of modern companies hinders investors and regulators.

GreenReaper 20:36, 16 Jun 2005 (UTC)

But is it true that a goodwill entry is only created on the balance sheet when a company is purchased? In other words, a company, which has never done any kind of mergers, would have no "Goodwill" asset line?

Another definition of goodwill

In addition to a definition identical to that given in the English version, another definition of goodwill seems to relate to all assets (not simply intangible assets). The trouble is that both definitions are relevant to accounting. The second definitions is as follows:

Goodwill is the total sum which a purchaser is prepared to pay having regard to future expectations of yield above the value of all TANGIBLE [my emphasis] and intangible assets less any debts.

Could anyone say which definition applies when talking about EBITDA? Thank you.

"Intrinsic value" concept

I added quotation marks around this term since, in many economic circles, the concept is no longer accepted as economically valid. Value comes from the estimates of individuals in the marketplace and varies with time and circumstance. Thus, value fluctuates--and is not intrinsic--and is better represented in, say, market capitalization, or in the valuation given by the acquirer at purchase time, that is, in the goodwill classification. -- RayBirks 15:48, 12 February 2007 (UTC)

IP?

From the article:

but the company's overall value (including brand, customer, intellectual capital) is valued at

Could you in theory sell the intellectual capital and possibly the brand just like buildings and computers and such? Shinobu (talk) 07:30, 13 July 2008 (UTC)

"Negative goodwill is recognized as a liability."

That is what the article says, but the reference says that negative goodwill is recognized as income. Are these somehow both true? —Preceding unsigned comment added by 199.246.40.54 (talk) 11:56, 17 September 2008 (UTC)

There is no such thing as "negative goodwill". I believe what you are referring to is a "bargain purchase", which is where the fair value of assets acquired is greater than the amount you paid for them. —Preceding unsigned comment added by 216.24.166.178 (talk) 17:45, 6 August 2009 (UTC)

Negative Goodwill is a concept. Historically, Negative Goodwill was recognized as a liability. This has changed as modern accounting has evolved, and Negative Goodwill is no longer recognized as a liability. SFAS 141 established a new way to treat negative goodwill. The Negative Goodwill (excess fair value of assets over acquisition cost) shall be allocated as a pro rata reduction of the amounts that otherwise would have been assigned to all the acquired assets (with several exceptions). If any excess remains after reducing to zero the amounts that otherwise would have been assigned to those assets, that remaining shall be recognized as an extraordinary item.

The original reference in the article is to an accounting definition. The definition found by following the link has been updated and no longer matches with the description of Negative Goodwill in this article (which has not been updated). The concept of Negative Goodwill is more complicated, and proper details on how to recognize Negative Goodwill cannot be summarized in one sentence. Negative Goodwill should have its own section or a link to its own article. In any case, the sentence stating that "Negative Goodwill should be recognized as a liability." should be corrected as this is no longer the proper way to recognize Negative Goodwill. — Preceding unsigned comment added by Rippy33 (talk • contribs) 19:47, 8 December 2010 (UTC)

Consumer goodwill

What connection is there between goodwill as an accounting concept and consumer goodwill, i.e. public reputation of a company? Tisane (talk) 04:20, 27 March 2010 (UTC)