Goodwill
Glossary
Goodwill
Goodwill is the value of a UK business above its identifiable net asset value — representing the reputation, customer relationships, brand, location, workforce, and other intangibles that make the business worth more than the sum of its physical and contractual assets.
In accounting, goodwill only appears on a balance sheet after an acquisition (you can't capitalise self-generated goodwill). Acquired goodwill is amortised over its useful life under FRS 102, or held at cost less impairment under FRS 101 / IFRS. For tax purposes, post-April 2002 acquired goodwill is generally tax-deductible (Corporate Intangibles Regime); pre-2002 goodwill is not. Goodwill is typically the largest line item in M&A valuations of profitable, established businesses.
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