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Goodwill, Where are You?
Critical Perspectives on Accounting (2000) 11, 213 doi:10.1006/cpac.1999.0401 Available online at http://www.idealibrary.com on
Goodwill, Where are You? Goodwill, goodwill Developed or not Balance sheet yes Balance sheet not Who is to know what is what? What did you do To make it accrue Your product was better Your customers loved it An idea unique Your name writ upon it The ne plus ultra, the sine qua non By all it was valued By all it was known Except at home on the balance sheet spot Where assets were valued Your goodwill was not © 2000 Peggy deProphetis University of Pennsylvania This poem addresses the issue of what constitutes goodwill and sets forth the concept that goodwill developed by a company does not appear on the balance sheet. (Goodwill that is purchased does appear on the books of the purchasing company because it can be measured and valued. It is usually the amount above market value that the purchasing company is willing to pay. It's the amount paid for reputation and recognition.) The poem also expresses the idea that some assets cannot be presented on the balance sheet because it is difficult to establish an unbiased valuation. Companies frequently claim that "our people are our most important asset" and yet there is no way to establish our fair value so we do not appear on the balance sheet.
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Goodwill, Where are You? Goodwill, goodwill Developed or not Balance sheet yes Balance sheet not Who is to know what is what? What did you do To make it accrue Your product was better Your customers loved it An idea unique Your name writ upon it The ne plus ultra, the sine qua non By all it was valued By all it was known Except at home on the balance sheet spot Where assets were valued Your goodwill was not © 2000 Peggy deProphetis University of Pennsylvania This poem addresses the issue of what constitutes goodwill and sets forth the concept that goodwill developed by a company does not appear on the balance sheet. (Goodwill that is purchased does appear on the books of the purchasing company because it can be measured and valued. It is usually the amount above market value that the purchasing company is willing to pay. It's the amount paid for reputation and recognition.) The poem also expresses the idea that some assets cannot be presented on the balance sheet because it is difficult to establish an unbiased valuation. Companies frequently claim that "our people are our most important asset" and yet there is no way to establish our fair value so we do not appear on the balance sheet.
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