Goodwill in accounting is defined as what?

Goodwill is recognized in accounting as an intangible asset. This intangible asset arises when a company acquires another business for a price greater than the fair value of its identifiable net assets. Goodwill represents the value of the firm's brand reputation, customer relationships, employee relations, and other non-physical assets that contribute to the profitability and strategic advantages of the acquired company.

In contrast, tangible assets are physical items, such as buildings and machinery, while current assets are those expected to be converted into cash or used up within one year, like inventory or accounts receivable. Financial liabilities refer to obligations that a company owes to external entities, such as loans or bonds payable. Thus, categorizing goodwill as an intangible asset reflects its unique nature and significance in the context of acquisitions and business valuations.