What is goodwill?

In short

Goodwill is the premium a buyer pays for a business beyond the value of its assets minus debt. It covers the customer base, reputation and earning power.

In practice

Goodwill only appears in the accounts when it has been bought — internally generated goodwill is not recognised. Purchased goodwill is amortised over its useful life, often up to 10 years, and over 7 years for tax.

Related terms

• Immaterielle aktiver (intangible assets)
• Afskrivning (depreciation)
• Aktiver (assets)
• See every term in the dictionary

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