2006-10-27 00:38:34 · 2 answers · asked by fanna malique 1 in Business & Finance ➔ Other - Business & Finance
Goodwill is the value assigned to the business. In order to have goodwill a business must be established for a period of time, it must have a good reputation and it must be saleable. If the partners are the ones who make it go and they leave the business might not be worth anything. If it is a large partnership and any one partner leaving would not hurt the business then there could be goodwill.
Goodwill is a value assigned to the business that would be in excess of what the assets and cash flow would bring by themselves
2006-10-27 00:56:13 · answer #1 · answered by waggy_33 6 · 0⤊ 0⤋
Basically, Goodwill would be the amount of money you would be willing to pay for a business above and beyond the value of the assets. If you paid $250,000 for a business that has assets worth $200,000 then the $50,000 dollar difference is goodwill and it is then amortized over a period of time usually about 20 yrs. Goodwill only comes in to play when a business is sold for more than the assets are worth. You are in essence saying that because of customer base, reputation, and future earnings potential that you are willing to pay a little more for a business than you are actually getting in the value of the assets.
2006-10-27 09:05:36 · answer #2 · answered by brenden b 2 · 0⤊ 0⤋