Goodwill is a term used in accounting to describe an intangible asset that reflects the premium paid by a buyer over the net value of the other assets of a firm that is purchased as a going concern). It is recognized only through an acquisition and cannot be self-created). Goodwill is classified as an intangible asset on the balance sheet since it cannot be seen or touched). It is often understood to represent the intrinsic ability of a firm to acquire and retain customer business, where that ability is not otherwise attributable to brand name recognition, contractual arrangements, or other specific factors).

Goodwill is a special type of intangible asset that represents that portion of the entire business value that cannot be attributed to other income-producing business assets, tangible or intangible). It is calculated by taking the purchase price of a company and subtracting the difference between the fair market value of the assets and liabilities. Items included in goodwill are proprietary or intellectual property and brand recognition, which are not easily quantifiable.

Goodwill is a long-term asset that generates value for a company over a number of years. It can relate to the value of the purchased companys brand reputation, customer service, employee relationships, and intellectual property. While goodwill officially has an indefinite life, impairment tests can be run to determine if its value has changed due to an adverse financial event. If there is a change in value, that amount decreases the goodwill account on the balance sheet.

It is important to note that goodwill is different from other intangible assets like licenses and patents, which can be sold and purchased separately. Goodwill cannot exist independently of the business, nor can it be sold, purchased, or transferred separately.

In addition to its accounting definition, Goodwill is also the name of a non-profit organization that provides free career counseling, skills training, and resume preparation services to help people overcome challenges to build skills, find jobs, and grow their careers.