The concept of goodwill refers to the intangible asset indefinite that has the ability to create profits for a company over time. They refer above all to brand value, prestige, employee relations, customer base, recognition, etc.
Although the value of goodwill is inherent in a company, it is only recorded after the purchase of a company.
Goodwill is calculated as the excess of the price paid by the company over the value of the net worth. That is, if the different components of a company's equity are valued for 10 million euros, but the company is purchased for 12 million, the goodwill would therefore be 2 million euros.
When explaining the definition of goodwill, one should look at large multinational companies, such as Coca Cola. Marketing and promotional work over the years has allowed it to acquire great brand recognition, which is what gives it such high goodwill.
Goodwill is also called Goodwill. Although it is an intangible asset, since it is not physical like equipment or buildings, it does reveal the benefits of a company. The goodwill account is located in the part of the assets of the balance sheet of a company.
The value of goodwill is known above all when one company is bought by another. It will be the amount that the company pays for it above the book value. In the event that you pay less than the book value, the goodwill will be negative.
In accounting, goodwill is a non-depreciable asset, but in some countries laws are being modified so that it begins to be depreciable.