The Goodwill or commercial establishment is the set of tangible and intangible goods, organized by the employer, that constitute an economic - commercial or industrial unit, destined to the production of goods or services, and the commercialization of products and specific exploitation. There is a whole with its own individuality, before which the goods that compose it lose their own identity, because they are affected by the achievement of an end superior to that of each particular good.
Goodwill is calculated as the excess of the price paid by the company over the value of the net assets. That is, if the different components of a company's assets are valued at € 10 million, but the company buys for € 12 million, the goodwill would therefore be € 2 million.
In explaining the definition of goodwill, one must look at large multinational companies, such as Coca Cola. Marketing and promotion work during the year has allowed him to acquire great brand recognition, which is what gives him that goodwill.
Goodwill is also called Goodwill. Although it is an intangible asset, since it is not physical like equipment or buildings, it leaves a note about the profits of a company. The goodwill account is located on the assets side of a company's balance sheet.
The value of goodwill is known especially when one company is bought by another. It will be the amount that the company pays above the book value. In the event that you pay less than the book value, the capital gain will be negative.
In accounting, goodwill is a non-depreciable asset, but in some countries the laws are being modified so that it begins to be amortized.
Goodwill is made up of several aspects that make up the trajectory and performance of the company, such as:
- Customers: if the company serves its customers well, throughout its history it will gain loyal customers who will always turn to it if necessary.
- Organization and efficiency: the company has discovered throughout its history efficient ways of organizing work. This knowledge is part of its immaterial value.
- Prestige: the company is considered in the market a respectable company for its track record and its products or services. This also facilitates access to credit, among other advantages.
All these elements, and others, are not quantified in the assets of a company. That is why the concept of “goodwill” is necessary to account for this value, which, although intangible, is of utmost importance to any business entity.
