Goodwill

Can anyone tell me an easy term to remember what goodwill is?

Speak monkey language to me!! lol..

Comments

  • katsutlieff
    katsutlieff Registered Posts: 459
    Goodwill is a non tangable asset of a business. I understand it as the companies repuatation, customer base etc.

    When the business is sold or a new partner admitted the goodwill is given a value. So a business with fixed assets of £30,000 may have goodwill of £10,000. So the business will be sold as £40,000 to the new owners as they will have paid for the goodwill as well.

    Hope this makes sense, I know what I want to say just can never convert to paper
  • bagpuss3008
    bagpuss3008 Registered Posts: 32 ? ? ?
    Hi

    We were always taught that goodwill is the "difference between the value on the balance sheet and what somebody would actually pay for it"...not sure if that makes too much sense though?!

    :001_smile:
  • Mog17
    Mog17 Registered Posts: 91 ? ? ?
    Hi

    We were always taught that goodwill is the "difference between the value on the balance sheet and what somebody would actually pay for it"...not sure if that makes too much sense though?!

    :001_smile:

    It does make perfect sense. Goodwill is an intangible fixed asset (can't touch it, not physical) but is the difference between the total worth of a business and the sum of the business' assets. So if I said my business was worth £300,000 but the assets equalled £200,000 the £100,000 difference is the goodwill part representing reputation, client base etc etc.
  • MWAUGH1983
    MWAUGH1983 Registered Posts: 420
    yeah I remember good will from uni when I did group accounts. its the diff between value and amount paid; then one third I think is reported in the profit and loss and the other 2 thirds in the balance sheet - think thats the rite way round but you might that need to know about the 1 or 2 thirds thing lol
  • Ickleorla
    Ickleorla Registered Posts: 5 Regular contributor ⭐ ? ⭐
    I remember Goodwill as being 'The difference between the value of the company as a whole and the aggregate of its Assets and Liabilities' - I originally obtained this from a model answer to a past paper.

    Hope it helps?
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