Saturday, November 26, 2011






Goodwill in Balance Sheet

We always see the term "GOODWILL" appears in companies' balance sheet.  So, what is a goodwill?  According to, goodwill is "the established reputation of a business regarded as a quantifiable asset and calculated as part of its value when it is sold".  Sound hard to understand?  Well, in a layman term, it means a company is sold to a buyer company at a higher price than its NAV.  The difference between the higher buying price and the lower NAV will be shown in buyer company's balance sheet as goodwill.