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Definition of 'Goodwill'
An account that can be found in the assets portion of a company's balance sheet. Goodwill can often arise when one company is purchased by another company. In an acquisition, the amount paid for the company over book value usually accounts for the target firm's intangible assets.
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Investopedia explains 'Goodwill'
Goodwill is seen as an intangible asset on the balance sheet because it is not a physical asset such as buildings and equipment. Goodwill typically reflects the value of intangible assets such as a strong brand name, good customer relations, good employee relations and any patents or proprietary technology.
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FAS 142 is an accounting rule that changes the way companies treat goodwill. Be aware of the impact it has on reported earnings to avoid making bad investment decisions.
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Learn what corporate restructuring is, why companies do it and why it sometimes doesn't work.
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Carefully examine goodwill and its sources before considering the value of your investment.
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Impairment charge is a term for writing off worthless goodwill, but you need to know what it means and what its potential impact is on EPS.
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Find out how the Tier 1 capital ratio can be used to tell if your bank is going under.
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