Meaning and recognition
Goodwill arises in the accounting for an acquired business under business-combination rules; it must not automatically be equated with all intangible assets or with good reputation. The IAS 38 overview separates acquired goodwill from its scope and states that internally generated goodwill is not recognized as an identifiable resource. Source: **curr-stat-ias38**, About.
What the residual may represent
Economically, the residual from the transaction may reflect expectations of benefits that are not separately identified. This is not proof of overpayment, but neither is it an independent guarantee of the acquisition’s future success. Results must be checked after the transaction.
Impairment and limits
IAS 36 provides for an annual assessment of acquired goodwill in the relevant cash-generating units and prohibits reversal of its impairment. Source: **curr-stat-ias36**, About. Do not treat goodwill as a cash reserve or equate its amount with the market value of a brand. Related guides: [financial statements roadmap](/guides/financial-statements-roadmap/) and [balance sheet](/guides/balance-sheet/).