Goodwill

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The Australian  Apr 5  Comment 
BHP Billiton has teamed up with a not-for-profit group to build a $70m site in the Pilbara, with all profits to go back into the ­community.
Reuters  Mar 23  Comment 
Greek Prime Minister Alexis Tsipras and German Chancellor Angela Merkel put on a public display of mutual goodwill on Monday, appealing to Greeks and Germans to set aside recrimination and national stereotypes and work for a better European future.
Wall Street Journal  Mar 2  Comment 
Ocwen said its fourth-quarter results would include a goodwill write-down of about $370 million to $420 million and it would seek an extension to file its quarerly report.
DailyFinance  Feb 25  Comment 
Filed under: Charity, Shopping, Deals, Saving primenerd/Flickr At a Goodwill in Asheville, North Carolina, a Tennessee man paid 58 cents for an old West Point jacket worn by the legendary Vince Lombardi when he was coaching football at the U.S....
The Australian  Feb 23  Comment 
VOCATION expects to write off up to $245 million in goodwill as the education company continues talks with its bankers.
Gold Stocks Today  Dec 27  Comment 
What Was His Crime? I'm not talking about Jesus but the 6-year-old Palestinian child who got off a bus – and got shot in the face at close range with a 15.5gram high velocity rubber bullet. So his crime was 1)Being Palestinian and 2)Not being...




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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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