Goodwill (accounting)

Goodwill is like when your mommy or daddy make friends with someone and they become really good friends. They might decide to work together, and if they do, they might find that they can make more money together than they could on their own. That's kind of like what goodwill is in accounting.

When a company makes friends with another company and they decide to work together, they might pay more than what the other company is worth. This extra money they pay is called "goodwill." Just like your mommy or daddy might pay extra money to work with their friend, a company might pay extra money to work with another company they really like.

When a company pays extra money for goodwill, they put it under something called "intangible assets." This means that it's not something they can touch like a desk or a computer. It's just a good feeling they have about working with a company they like.

When the company puts the extra money they paid for goodwill under intangible assets, it's kind of like they're saying, "We think that working with this company is going to be really good for us." They're keeping track of this in their accounting so they can see how much they paid for goodwill and how it's helping them to make more money.