Goodwill is generally considered to be the amount paid for a
business over its fair market value or its identified assets.
Examples of goodwill include the right to use the name of a
purchased business and the right to represent that the buyer in a
transaction is carrying on the purchased business as carried on by
Beyond the necessity of including goodwill as an asset category
for tax and accounting purposes, however, is recognizing goodwill
as representing the synergy among assets used by a business to
produce income. In other words, goodwill demonstrates that
the whole is greater than the sum of its parts.
Examples of this synergy value include business longevity,
exclusive market access, competitive advantages, market share and
industry connections. Synergy value is expressed as goodwill
in transactions and is assigned a dollar value accordingly.
In the world of accounting, goodwill is considered a type of
intangible asset. Intangible assets are those other than
financial assets (such as accounts receivable or cash) that lack
physical substance. The existence of intangible assets can be
demonstrated and their effect is to increase overall business
Examples of intangible assets include marketing related assets
such as trademarks and domain names, customer-related assets such
as customer contracts and databases, as well as technology-related
assets such as third party software licenses.
It is important to note that goodwill is listed separately from
other intangible assets on a balance sheet because it is treated
differently from an accounting perspective. Most intangible
assets can be amortized because their useful life is
determinable. In contrast, goodwill has an indefinite useful
life and is reassessed each year for impairment.
The legal purpose of goodwill, as such, is to allocate value to
the synergy value of a businesses and is often identified as a
distinct asset category in asset purchase transactions.
Norton Rose Fulbright Canada LLP
Norton Rose Fulbright is a global legal practice. We provide
the world's pre-eminent corporations and financial institutions
with a full business law service. We have more than 3800 lawyers
based in over 50 cities across Europe, the United States, Canada,
Latin America, Asia, Australia, Africa, the Middle East and Central
Recognized for our industry focus, we are strong across all
the key industry sectors: financial institutions; energy;
infrastructure, mining and commodities; transport; technology and
innovation; and life sciences and healthcare.
Wherever we are, we operate in accordance with our global
business principles of quality, unity and integrity. We aim to
provide the highest possible standard of legal service in each of
our offices and to maintain that level of quality at every point of
Norton Rose Fulbright LLP, Norton Rose Fulbright Australia,
Norton Rose Fulbright Canada LLP, Norton Rose Fulbright South
Africa (incorporated as Deneys Reitz Inc) and Fulbright &
Jaworski LLP, each of which is a separate legal entity, are members
('the Norton Rose Fulbright members') of Norton Rose
Fulbright Verein, a Swiss Verein. Norton Rose Fulbright Verein
helps coordinate the activities of the Norton Rose Fulbright
members but does not itself provide legal services to
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should be
sought about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).