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Asset Goodwill Essay

904 words - 4 pages

“Goodwill arises when one company acquires another company (in a business combination accounted for as a purchase) for a price in excess of the fair market value of the net identifiable assets (identifiable assets less liabilities assumed) acquired” (Fraser, Ormiston, 2013). What are the key factors in the creation of business goodwill? These are going concern, excess business income & the expectation of future economic benefits. Within a business they are three sources of goodwill. These are as follows:
* Expertise of the workforce which states that there is no value included on the balance sheet as an asset for costs incurred for labor expertise.
* The reputation of the ...view middle of the document...

Current liabilities are things like unpaid accounts payables, unpaid wages and credit card balances.
With all of the obvious assets and liabilities that are listed on a balance sheet, goodwill, is almost one that is forgotten because it doesn’t seem to stand out. However, according to an article written by Industry Issues dated February 24, 2014 goodwill is a very interesting asset. This is because goodwill is not something you can buy or sell because it is an intangible asset. “An intangible asset is a non-physical asset having a useful life greater than one year” (Bragg, 2013). Just a few examples of an intangible asset are: trademarks, customer relationships, literary & musical works, pictures, services agreements, broadcast rights, patented technology, etc...
“Business goodwill reflects the synergy among the various assets used by the business to produce income” (ValuAdder, 2016). Synergy means that two or more companies can use each other’s ideas to grow their company and eventually produce more income. It is never a bad thing to have someone or something that you can look up to and compare your work to so that you will have an opportunity to improve. In most cases, if you can learn something from someone else they will be able to learn from you and that is synergy. God sent his son Jesus to the Earth so that he could live a life that we would need to follow and that is what our job as Christians is, to follow his lead. “You call me Teacher and Lord, and you are right, for so I am. If I then, your Lord and Teacher, have washed your feet, you also ought to wash one another's feet. For I have given you...

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