Goodwill is an intangible asset that represents the reputation and business connections a firm has built over time. In legal and accounting terms, it is the benefit and advantage of the good name, reputation, and connection of a business.
Characteristics: of Goodwill
Intangible Asset: You cannot see or touch it, but it has significant saleable value.
Customer Loyalty: It is the "probability that the old customers will resort to the old place."
Transferability: Under Section 55 of the Indian Partnership Act, 1932, when a firm is dissolved, the goodwill may be sold either separately or along with the other assets of the firm.
Value: It is generally calculated as the value of the firm's expected future profits that exceed a "normal" rate of return in that industry.
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