EFFECT OF GOODWILL ON COMPANY FINANCIAL RESULTS

Goodwill is the difference betweenthe value of a company in the stock market at aparticular time and its accounting-asserted netassets. This is the premium that the buyer of acompany pays over the net assets of a companybecause of its reputation in the market, brand,management and staff expertise and the know-how.It is an intangible value of a company that enablesit to make greater profits. In this paper we exploresome of the basic characteristics of goodwill whichis becoming an increasingly more importantelement by which increasing of the capital value ofa company is achieved. We study the main factorsthat determine the amount of goodwill, and we alsodeal with the analysis of accounting displays ofgoodwill and effects it has on a company's financialresults.