I8.351 Valuing goodwill—overview
Goodwill has been described as the benefit of a good reputation which brings in custom and distinguishes an old established business from a new business at its start up1.
The modern concept of goodwill can be stated as the amount by which the value of a business exceeds the current market value of the tangible assets. This excess usually represents a capitalisation of super profits, so that, if the assets employed in the business are earning less than an average return, there is an element of 'badwill' or 'negative goodwill'.
If the profits are higher than average, the excess, or super profit, is the yardstick by which the goodwill is measured. There are a few exceptions to this rule where
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