Goodwill

This is resembles the spirit of the company, also included as an intangible asset. When you buy a business carrying a famous name, the name alone acts as a supernatural magnet attracting more customers therefore translating into a big pool of sales. It cannot be measured by any means but the value is dictated by how much more a buyer is willing to pay for the company. For example, you make good cookies and the total cost for all the equipment and furniture (spoons, oven, knife, tables, glass, toilet paper) is $10,000. The reputation of your shop is sky high and your employees are efficient and the most important of all, the secret ingredient for making such good cookies. When someone is willing to purchase your shop for $100,000 which is way over the fair cost of your business, he or she is paying $90,000 more for goodwill.