Goodwill

Goodwill represents the intangible value of a business beyond its identifiable net assets. It typically arises in the context of an acquisition, where the purchase price exceeds the fair value of tangible and intangible assets acquired and liabilities assumed.

Goodwill encompasses:

• Brand reputation

• Customer loyalty

• Patented technology

• Workforce expertise

• Strategic relationships

Goodwill is recorded as a long-term asset on the balance sheet and, under IFRS and GAAP, must be tested for impairment annually or upon triggering events. Impairment occurs if the asset’s market value falls below its carrying value, leading to write-downs impacting profitability.