goodwill

noun
good·​will | \ ˌgu̇d-ˈwil How to pronounce goodwill (audio) \

Definition of goodwill

1a : a kindly feeling of approval and support : benevolent interest or concern people of goodwill
b(1) : the favor or advantage that a business has acquired especially through its brands and its good reputation
(2) : the value of projected earnings increases of a business especially as part of its purchase price
(3) : the excess of the purchase price of a company over its book value which represents the value of goodwill as an intangible asset for accounting purposes
2a : cheerful consent accepted the terms of the contract with goodwill
b : willing effort

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Other Words from goodwill

good-willed \ ˌgu̇d-​ˈwild How to pronounce good-willed (audio) \ or less commonly goodwilled adjective

Examples of goodwill in a Sentence

She has goodwill toward all her coworkers. They allowed him to keep the extra money as a gesture of goodwill.

Recent Examples on the Web

France and Germany have since June led an informal group of eight countries trying to help shoulder the burden, although the specific shares of people that each country takes are decided boat by boat, relying largely on goodwill. Washington Post, "As Malta disembarks migrants more charity-govt clashes loom," 23 Aug. 2019 Yes, Zuckerberg’s original vision turns out to have been naive: that Facebook could become a worldwide platform free of constraints with a live-and-let-live attitude relying on the goodwill of users everywhere. Vincent Carroll, The Denver Post, "Carroll: Put down your pitchforks and get real about Big Tech’s trade-offs," 21 June 2019 The campaign came together quickly — with supporters hoping to build on the goodwill generated by teachers during their six-day strike in January. Howard Blume, latimes.com, "Parcel tax for L.A. schools is latest ask of taxpayers," 4 June 2019 This decision meant that all five members of the Peri family were now utterly dependent on Huguette's goodwill. Meryl Gordon, Town & Country, "The Curious Life and Shocking Death of Huguette Clark," 21 May 2014 People of goodwill may on occasion differ on answers and on specific public policies. K.n.c., The Economist, "India cannot flourish without individual freedom," 16 Aug. 2019 But a partnership with the UN is exactly the kind of thing that Samsung could use to build a similar kind of goodwill. Jon Porter, The Verge, "Samsung isn’t going it alone in the fight against Apple and Google," 8 Aug. 2019 One Indian pilot was captured and later released as a gesture of goodwill. Fox News, "At least 18 dead after Pakistani military plane crashes into village," 31 July 2019 The other saw the possibility of last year’s 100-plus-loss season repeating itself and viewed the idea of bringing Jones back as a sign of goodwill to the fans that decided to come to Camden Yards all the same. Jon Meoli, baltimoresun.com, "Orioles reset: Re-evaluating the Orioles’ decision not to bring back Adam Jones," 22 July 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'goodwill.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of goodwill

before the 12th century, in the meaning defined at sense 1a

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Statistics for goodwill

Last Updated

2 Sep 2019

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Time Traveler for goodwill

The first known use of goodwill was before the 12th century

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More Definitions for goodwill

goodwill

noun

Financial Definition of goodwill

What It Is

Goodwill is the excess of purchase price over the fair market value of a company's identifiable assets and liabilities.

How It Works

Goodwill is created when one company acquires another for a price higher than the fair market value of its assets; for example, if Company A buys Company B for more than the fair value of Company B's assets and debts, the amount left over is listed on Company A's balance sheet as goodwill.

The account for goodwill is located in the assets section of a company’s balance sheet. It is an intangible asset, as opposed to physical assets like buildings and equipment.

Goodwill is an accounting construct that is required under Generally Accepted Accounting Principles (GAAP). The concept can be best illustrated with an example:

Assume that Company ABC wants to acquire Company XYZ. ABC purchases all of the outstanding stock of XYZ for $8,000,000. On the acquisition date, Company XYZ lists the following assets and liabilities:

An appraisal estimates the fair market value (FMV) of the PP&E at $7 million. The book value of all the other assets and liabilities is equal to FMV.

The fair value of XYZ's assets and liabilities is $2,000,000 + $7,000,000 - $4,000,000 = $5,000,000. We leave out the goodwill listed on XYZ's balance sheet because it's not a real asset being purchased by ABC -- it's an accounting construct XYZ was required to list pursuant to a prior acquisition.

ABC paid $8,000,000 for the stock, so on its next balance sheet, ABC will list an account called Goodwill that will have a value of $3,000,000.

The stock of many well-known companies is worth more than the value of their assets. To cite notable examples, the majority of Coca-Cola's share value is not in its brick-and-mortar bottling plants, but instead in the brand name and "secret formula" of its storied soft drink brand.

Why It Matters

Even though goodwill is listed as an asset, it can't be bought or sold. Many analysts prefer to not consider it when they are examining a firm's assets. One commonly used measure is "tangible book value," which excludes non-cash balance sheet items like goodwill and amortization.

The appropriate value of goodwill is very hard to define. It is possible for an acquiring company to pay too much for the acquiree, and if the acquired net assets fall in value, the acquiring company must write them down (a process called "impairment"). Impairment charges flow to the income statement, and will negatively affect EPS and the firm's stock price.

Source: Investing Answers

goodwill

noun

English Language Learners Definition of goodwill

: a kind, helpful, or friendly feeling or attitude
business : the amount of value that a company's good reputation adds to its overall value

goodwill

noun
good·​will | \ ˈgu̇d-ˈwil How to pronounce goodwill (audio) \

Kids Definition of goodwill

: kind feelings or attitude

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goodwill

noun
good·​will | \ ˈgu̇d-ˌwil How to pronounce goodwill (audio) \

Legal Definition of goodwill

1 : an intangible asset that is made up of the favor or prestige which a business has acquired beyond the mere value of what it sells due to the personality or experience of those conducting it, their reputation for skill or dependability, the business's location, or any other circumstance incidental to the business that tends to draw and retain customers
2a : the value of projected increases in the earnings of a business especially as part of its purchase price
b : the excess of the purchase price of a business above the value assigned for tax purposes to its other net assets

Note: The Internal Revenue Code requires the purchaser of a business to allocate the purchase price among the various types of assets. Frequently the purchase price is greater than the sum of the values of the individual assets. The excess is labeled goodwill. Because of its indefinite life, goodwill is not amortizable as an asset. The purchaser will therefore usually try to keep the allocation to goodwill as small as possible.

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More from Merriam-Webster on goodwill

Rhyming Dictionary: Words that rhyme with goodwill

Thesaurus: All synonyms and antonyms for goodwill

Spanish Central: Translation of goodwill

Nglish: Translation of goodwill for Spanish Speakers

Britannica English: Translation of goodwill for Arabic Speakers

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