goodwill

How is Goodwill Calculated?

Goodwill is calculated as the difference between the purchase price of a business and the fair value of its identifiable net assets. The formula is:
Goodwill = Purchase Price - Fair Value of Net Identifiable Assets
For example, if a company is bought for $1 million and the fair value of its net identifiable assets is $700,000, the goodwill would be $300,000.

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