Goodwill: A Present Property Right or Only an Anticipated Future Right?
4 Pages Posted: 11 Feb 2009
Date Written: July 23, 2008
The notion of goodwill is controversial for good reason. The usual treatment of goodwill as a present property right, e.g., in the accounting treatment of purchased goodwill as an asset, is based on a rather fundamental confusion between a present property right and an anticipated future right. Unfortunately, the confusion extends to some of the basic ideas and formulas of finance theory so the matter has long resisted clarification. My purpose here is to present the argument why goodwill is not a present property right in a brief and simple manner.
Keywords: Goodwill, property rights, going-concern contractual position
JEL Classification: G10, M41, M44
Suggested Citation: Suggested Citation