Originally Posted by
inOban
As I understand it, when TC bought MyTravel, they considered it had a capital value of £x billion. They now believe it is worth £1.5 billion less. This is important because the capital value of a company's assets have to be set against its liabilities or debts, and TC has huge debts.
As for "goodwill" if a company buys another, part of the price will be the physical assets, bank balance etc, and its existing order book, but some will be the good name of the business, its contacts, and so on.
That's how I understand it, but I'm not an economist or accountant.
Yeah that pretty much sums up goodwill in a nutshell. Put very simply, in the case of acquisition, any value not explicitly explained by the assets/liabilities can be deduced to be goodwill.