Business Glossary

worth of a business to another company or person. Going-concern value less asset value (liquidating value) is the entity's value as differentiated from the value of its assets. In a business combination accounted for under the purchase method, going-concern value less liquidation value is referred to as goodwill . For example, if Company A pays $5 million cash for Company B, which has net assets worth $4 million, $1 million represents goodwill.

value of a company as an operating business to another company or individual. The excess of going-concern value over asset value, or liquidating value , is the value of the operating organization as distinct from the value of its assets. In acquisition accounting, going-concern value in excess of asset value is treated as an intangible asset, termed goodwill. Goodwill is generally understood to represent the value of a well-respected business name, good customer relations, high employee morale, and other such factors expected to translate into greater than normal earning power.

value of a company as an operating business to another company or individual. The excess of the goingconcern value over the asset value, or liquidating value is the value of the operating organization as distinct from the value of its assets, called goodwill .