goodwill refers to the value of an intangible asset found on a company's balance sheet. a company's brand recognition, intellectual property and reputation among it's customers and employees can all count toward it's goodwill value. when a company is acquired for a higher price than it's book value, the excess value of the target company is recorded under a balance sheet's goodwill. for example, murphy media, a major film and television company is looking to acquire the fairway five friend which is valued at $10,000,000 based on the value of it's film franchise, comic books, ? and merchandising rights. murphy media buys fairway five for $50,000,000. this purchase price consists of $10,000,000 for the physical assets of fairway five and an additional $40,000,000 for it's goodwill which consist of it's global brand awareness, loyal and devoted fun base and the revenue making potential of it's film sequels and spin-offs in other mediums. goodwill plays a bigger role in publicly traded companies than private firms. this is because publicly traded companies are constantly under public scrutiny and subject to market valuation. ? ethics and actions of public firms are easier to see and quantify. goodwill often changes and companies have to subject goodwill to amortization or impairment tests to accurately reflect the goodwill asset on the balance sheet.
- count toward・・・～に考慮される
- impairment test・・・減損テスト