what is good will and what are the different types of good
will
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Answer Posted / jayasree
Goodwill is the premium paid by an acquiring company over
and above the acquired company's tangible book value. On a
company's balance sheet, goodwill represents the sum of all
the premiums the company has paid for all of its
acquisitions (although occasionally goodwill from past
acquisitions whose value has fallen is written down).
However, most companies have intangible assets - such as
relationships with key customers, patents and trademarks,
the unique character of its employees, which are not so
easily replaced. So, acquiring companies frequently pay
more for a company than its tangible book value.
The acquiring company must carry the premium it pays for
its acquisition targets above tangible book value
as "goodwill".
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