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Accounting
Goodwill
The extra amount a company pays when buying another business because of its strong reputation, loyal customers, or brand power.
Goodwill is an intangible asset that is not amortized but is tested every year for impairment. If the purchased company loses value, goodwill is written down.It's like paying $300 for a used car that's only worth $200 on paper because everyone loves the way it looks and drives.
Real world: When Disney bought Pixar, it paid way more than the value of Pixar's equipment and movies — the extra amount became goodwill on Disney's books.
💡 Goodwill shows that sometimes the 'extra' you pay for a business is its most valuable part — but it can disappear if the magic fades.