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Goodwill

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Goodwill refers to the value a company gets from its brand, customer base and reputation associated with its intellectual property. Goodwill is a long-term assets that generates value for a company over a number of years.

Because they have no physical form, both patents and goodwill are intangible assets—as opposed to tangible assets such as land, buildings and equipment. Because they deliver value over time, they are amortized on the income statement. That is to say that the expenses associated with patents and goodwill are spread across multiple years.

More about goodwill

As you can see in this example, goodwill appears in the balance sheet under the heading patents and goodwill.

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