Did you know there is an accounting alternative for amortizing goodwill? In order to understand the alternative, it first makes sense to know what goodwill is and how it is generated. Simply put, goodwill is the amount by which the purchase price, or consideration paid, in a transaction exceeds the net identifiable tangible and intangible assets acquired.

This article addresses how goodwill is initially measured, who can elect the accounting alternative, and what it means for business owners and company value.