Goodwill is amortized over a set period of years, similarly to depreciation.
Goodwill from an accounting standpoint is the value placed on intangible company assets such as reputation or customer list value. Intangibles are non physical items (e.g., copyrights or patents) that are expected to support future business earnings.
Goodwill value, when added to the Book Value of a company’s assets, will usually increase the actual purchase price of the company.
When selling a company, the dollar amount assigned to Goodwill is usually subject to significant negotiation.
Different industries have different types of intangible assets that will affect the purchase price of a business.