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The concept of goodwill accounting involves paying for an intangible service instead of tangible ones. An example of this is paying for a company's good reputation.

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Q: What does the concept of goodwill accounting involve?
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It's difficult to place the exact value on goodwill and it will always involve expert judgement.


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On the assets side. Goodwill = (Liabilities + equity or capital) - Assets. Goodwill is an intangible asset. As per Wikipedia, it is the intangible but quantifiable "prudent value" of an ongoing business beyond its assets. Goodwill could correspond to the estimated financial value of brand name, intellectual property, trademark, etc. Goodwill does not serve much purpose if a company is closed down. In the absence of Goodwill, the above equation reduces to the traditional accounting equation: A = L + C.