Frequently Asked Questions(FAQ)

Why is goodwill an asset?

Goodwill is classified as an asset because it provides ongoing revenue generation. In addition, the value of goodwill does not decrease over time, which makes it a long-term asset.

What is an example of a goodwill asset?

An asset is classified as goodwill on the balance sheet if it is intangible and inherently embedded within a company. Some examples of goodwill are brand reputation, customer loyalty, and public trust.

How is goodwill recorded in accounting?

Goodwill is recorded whenever a company purchases another company, and the purchase price is greater than that company’s fair market value. The goodwill value is recorded on its own line, under long-term assets on a balance sheet.

About the Authors

Tetiana Sitiugina-Babiuk

Written by: Tetiana Sitiugina-Babiuk

Financial Sector Specialist and Content Strategist

Independent writer, content strategist, and financial sector specialist. Tatiana has an extensive experience in working with financial institutions such as Bank of Canada and Risk Management unit at FinDev Canada. She holds an MA in Financial Risk Management from the University of Toronto.

More about me

More About Glossary of Common Financial Terms

Show More