Definition
The intangible asset representing the premium paid during an acquisition over the fair market value of tangible assets—essentially the accountant's way of saying 'we overpaid, but let's call it strategic value.' It sits on the balance sheet until reality sets in and it gets impaired.
Example Usage
The company recorded $5 billion in goodwill from the acquisition, which the new CEO wrote down entirely two years later.
Origin
Used in business contexts since the 18th century, formalized as an accounting concept in the early 20th century.
Fun Fact
Goodwill impairment charges are often a polite way of admitting that last year's 'synergistic' merger was actually a disaster.
Source: GAAP and IFRS accounting standards
Related Terms
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