Financial Statements
Goodwill
An accounting asset created when a company buys another company for more than the fair value of its net identifiable assets.
Also called: acquisition goodwill
What it means
Goodwill appears when an acquirer pays more for a business than the fair value of the acquired identifiable net assets. It often reflects brand value, customer relationships, expected synergies, or other hard-to-separate benefits.
Why it matters
Large goodwill balances can matter if acquisitions underperform, because write-downs may later reduce earnings and book value.