Goodwill

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The Australian  Nov 16  Comment 
INVESTORS have raised concerns about ballooning levels of goodwill held by Australian listed companies.
Financial Times  Nov 10  Comment 
Israel slow to realise a change in sentiment over Palestine that could challenge its legitimacy
StreetInsider.com  Nov 7  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/Transocean+%28RIG%29+Reports+%241.97B+Non-Cash+Impairment+of+Goodwill%2C+Delays+Earnings+Release+/9988216.html for the full story.
BusinessWeek  Oct 29  Comment 
Mark Zuckerberg says the social network's acquisitions need a billion users to become "interesting to turn into businesses"
MarketWatch  Oct 28  Comment 
In a Securities and Exchange Commission filing, Facebook for the first time detailed its preliminary accounting for the message service WhatsApp that it acquired. WhatsApp's goodwill is valued at $15.3 billion, and "primarily attributable to...
Times Online  Aug 6  Comment 
Security camera footage captured a company director hurling his next-door neighbour over their garden fence last Christmas eve after a...
Forbes  Jul 28  Comment 
Will Debit Card Rewards Become a Perk of the Past?
Forbes  Jul 23  Comment 
Bargain shopping might have just become more costly with the news that Goodwill Industries International is investigating a potential credit card breach.  Federal authorities and a payment card industry fraud investigative unit contacted Goodwill...
CNNMoney.com  Jul 22  Comment 
Goodwill Industries said it has found no evidence of a security breach after working with federal investigators for several days, following reports of potential theft of customers' credit card data.




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Goodwill is the premium paid by an acquiring company over and above the acquired company's tangible book value. On a company's balance sheet, goodwill represents the sum of all the premiums the company has paid for all of its acquisitions (although occasionally goodwill from past acquisitions whose value has fallen is written down).

Because tangible book value is equivalent to the replacement cost of a company - IE, what it would cost to buy all the company's properties, buildings, factories, and machines, hire all its workers, etc. - you might think an acquiring company would never pay more than tangible book value. After all, the acquiring company could simply build the acquisition target company from scratch for the price of its tangible book value.

However, most companies have intangible assets - such as relationships with key customers, patents and trademarks, the unique character of its employees, which are not so easily replaced. So, acquiring companies frequently pay more for a company than its tangible book value.

The acquiring company must carry the premium it pays for its acquisition targets above tangible book value as "goodwill".

Goodwill is an intangible asset arising from an acquisition, but not all intangible assets are goodwill - only those a company owns as a result of purchasing other companies. It should be noted that because Goodwill is technically an intangible asset, companies will occasionally lump the two together on the balance sheet, typically as "Goodwill and Intangibles".

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