{
  "id": "goodwill",
  "version": "333ea90f7b9c",
  "status": "published",
  "name": "Goodwill Calculator",
  "question": "What goodwill does the deal create?",
  "summary": "Computes the goodwill from buying a business: the purchase price minus the fair value of the identifiable assets net of the liabilities assumed, or the bargain purchase gain when the price is lower.",
  "category": "finance",
  "subcategory": "business",
  "url": "https://www.acalculator.org/finance/goodwill-calculator",
  "markdown": "https://www.acalculator.org/finance/goodwill-calculator.md",
  "kind": "function",
  "method": "Net identifiable assets = identifiable assets − liabilities, at fair value. Goodwill = purchase price − net identifiable assets when that is above $0; when it is below, goodwill is $0 and the bargain purchase gain is net identifiable assets − purchase price.",
  "assumptions": [
    "The buyer acquires 100% of the business.",
    "Assets and liabilities are at their fair values on the purchase date, not their book values.",
    "Arithmetic is exact on the typed decimals; money shows to the cent and the share to 2 decimals, halves up."
  ],
  "inputs": {
    "$schema": "https://json-schema.org/draft/2020-12/schema",
    "type": "object",
    "properties": {
      "price": {
        "title": "Purchase price",
        "description": "The fair value of everything paid for the business: cash, shares and other consideration.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000000
      },
      "assets": {
        "title": "Identifiable assets at fair value",
        "description": "The fair value of the assets acquired that can be identified, including intangibles such as patents and customer lists.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000000
      },
      "liab": {
        "title": "Liabilities at fair value",
        "description": "The fair value of the liabilities the buyer takes on.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000000
      }
    }
  },
  "outputs": {
    "goodwill": {
      "label": "Goodwill",
      "description": "Purchase price − (identifiable assets − liabilities), when the price is higher; otherwise $0.",
      "format": "money"
    },
    "net": {
      "label": "Net identifiable assets",
      "description": "Identifiable assets − liabilities, at fair value. Negative when the liabilities are larger.",
      "format": "money"
    },
    "gain": {
      "label": "Bargain purchase gain",
      "description": "Net identifiable assets − purchase price, when the price is lower. Shown only then.",
      "format": "money"
    },
    "share": {
      "label": "Goodwill share of the price",
      "description": "Goodwill ÷ purchase price × 100. Shown when there is goodwill and the price is above $0.",
      "format": "percent"
    }
  },
  "defaultAnswer": {
    "inputs": {
      "price": 1200000,
      "assets": 1500000,
      "liab": 500000
    },
    "outputs": {
      "goodwill": 200000,
      "net": 1000000,
      "share": 16.666666666666668
    },
    "text": "Paying $1,200,000.00 for net identifiable assets of $1,000,000.00 creates goodwill of $200,000.00."
  },
  "examples": [
    {
      "given": {
        "price": 1200000,
        "assets": 1500000,
        "liab": 500000
      },
      "expect": {
        "goodwill": 200000,
        "net": 1000000,
        "share": 16.666666666666668
      },
      "source": "OpenStax, Principles of Financial Accounting, 11.1 Distinguish between Tangible and Intangible Assets (goodwill is recorded when the purchase price is in excess of the fair value of the identifiable net assets). https://openstax.org/books/principles-financial-accounting/pages/11-1-distinguish-between-tangible-and-intangible-assets; hand calculation in content.mdx: 1,500,000 − 500,000 = 1,000,000; 1,200,000 − 1,000,000 = 200,000 (200,000 ÷ 1,200,000 × 100 = 50/3, Python Fraction)"
    },
    {
      "given": {
        "price": 700000,
        "assets": 1000000,
        "liab": 200000
      },
      "expect": {
        "goodwill": 0,
        "net": 800000,
        "gain": 100000
      },
      "source": "IFRS Foundation, IFRS 3 Business Combinations, overview (the acquirer allocates the cost to the identifiable assets and liabilities at fair value and the rest to goodwill; an excess of the assets and liabilities over the consideration paid is a bargain purchase, recognised in profit or loss). https://www.ifrs.org/issued-standards/list-of-standards/ifrs-3-business-combinations/; hand calculation in content.mdx: 1,000,000 − 200,000 = 800,000; 800,000 − 700,000 = 100,000 gain"
    },
    {
      "given": {
        "price": 3456789.12,
        "assets": 2345678.9,
        "liab": 123456.78
      },
      "expect": {
        "goodwill": 1234567,
        "net": 2222222.12,
        "share": 35.71427001019952
      },
      "source": "OpenStax, Principles of Financial Accounting, 11.1 Distinguish between Tangible and Intangible Assets (goodwill is recorded when the purchase price is in excess of the fair value of the identifiable net assets). https://openstax.org/books/principles-financial-accounting/pages/11-1-distinguish-between-tangible-and-intangible-assets; hand calculation in content.mdx: 2,345,678.90 − 123,456.78 = 2,222,222.12; 3,456,789.12 − 2,222,222.12 = 1,234,567.00; 1,234,567 ÷ 3,456,789.12 × 100 = 35.714… (exact 771604375/21604932, Python Fraction)"
    },
    {
      "given": {
        "price": 500000,
        "assets": 500000
      },
      "expect": {
        "goodwill": 0,
        "net": 500000
      },
      "source": "OpenStax, Principles of Financial Accounting, 11.1 Distinguish between Tangible and Intangible Assets (goodwill is recorded when the purchase price is in excess of the fair value of the identifiable net assets). https://openstax.org/books/principles-financial-accounting/pages/11-1-distinguish-between-tangible-and-intangible-assets: no excess over the fair value of the net assets, so no goodwill"
    }
  ],
  "sources": [
    "OpenStax, Principles of Financial Accounting, 11.1 Distinguish between Tangible and Intangible Assets: goodwill is the value of favourable factors a business has; it is recorded when the purchase price is in excess of the fair value of the identifiable net assets. https://openstax.org/books/principles-financial-accounting/pages/11-1-distinguish-between-tangible-and-intangible-assets (retrieved 2026-10-19)",
    "IFRS Foundation, IFRS 3 Business Combinations, overview: the acquirer measures the cost at the fair value of the consideration paid, allocates it to the identifiable assets and liabilities at their fair values and the rest to goodwill, and recognises any excess of the assets and liabilities over the consideration (a bargain purchase) in profit or loss immediately. https://www.ifrs.org/issued-standards/list-of-standards/ifrs-3-business-combinations/ (retrieved 2026-10-19)"
  ],
  "related": [
    "business-valuation",
    "book-value",
    "shareholders-equity",
    "depreciation"
  ],
  "changelog": []
}