Question

Under what circumstances does goodwill increase?

Answer 1

Business goodwill is an intangible asset owned by an associated with the operation of a company . Goodwill is the premium that is paid when a business is acquired .If a business is acquired more than its book value , the acquiring business is paying for intangible item such as intellectual property , brand recognition, skiller labor and customers loyalty.

Business goodwill is an intangible assets that add value to a company .

Factors such as proprietary or intellectual property and brand recognition are reflected in goodwill.

While goodwill is not easy quantifiable ,it is calculated by subtracting the difference between the fair market value of a company's assets and liabilities from its purchase price .

Companies must record the value of goodwill on their financial statements and records any impairments.

The presence of goodwill implies that a company's value is greater than its combined raw assets . The effect of goodwill on a company's value is better understood by learning the factors that create business goodwill.The three factors in the creation of a company's goodwill include it's going concern value , excess business income and the expectations of future economic benefits.