Goodwill

Goodwill is an intangible asset that represents the value of a company's brand, customer relationships, and overall reputation. It typically arises when one company acquires another for more than the fair value of its tangible assets. This excess value reflects factors like loyal customers, strong market presence, and skilled workforce, which can contribute to future profits. Goodwill is recorded on a company’s balance sheet and is an important factor in mergers and acquisitions, indicating the potential for ongoing earnings that aren't tied to physical assets.