Definition: The value of intangible assets that appear on the balance sheet that exceeds the value of net tangible assets.

See Also: Amortization , allocation of purchase price .

Tips: The majority of the purchase price in most transactions is allocated to goodwill when determining the purchase price allocation. Allocating the price to goodwill is often best for the seller, as gains on goodwill are taxed at capital gains tax rates, not ordinary income tax rates.