Goodwill represents future economic benefits that cannot be identified separately, such as the customer base, employee know-how and expected synergies. Under TFRS, goodwill is not amortised but tested for impairment every year.
Calculating goodwill correctly requires allocating the purchase price to the assets (PPA).
Source: TFRS 3
Related terms
Purchase price allocation (PPA)Allocating the consideration paid in a business combination to the identifiable assets acquired and liabilities assumed at their fair values, with the remainder determined as goodwill.Impairment of assetsRecognising as a loss the excess of an asset's carrying amount over its recoverable amount.Business combinationA transaction or event in which an acquirer obtains control of one or more businesses.Accounting policiesThe specific principles, bases, conventions, rules and practices an entity applies in preparing its financial statements.Amortised costThe amount at which a financial asset or liability is measured at initial recognition, minus principal repayments, plus cumulative amortisation calculated using the effective interest method.AssociateAn entity over which the investor has significant influence but not control or joint control.
Last updated: October 22, 2026 · This definition is for general information only.