ermined.
Goodwill is the most ubiquitous of intangible assets. Traditionally, goodwill has been created when a firm is acquired at a price that includes a premium over the book value of the acquired company. In this traditional context, goodwill is defined as a representation of the future earning power of the firm that in turn is determined by the capitalization at an assumed rate of interest of anticipated earnings in excess of the long term average rate of return in the industry of which the acquired firm is a part. This theoretical definition, however, is applied after the fact because in truth the actual amount of goodwill is the amount negotiated by buyer and seller. Within this context, thus, goodwill is an intangible assets with characteristics that differentiate it from other intangible assets. It is quite within the realm of reason that the GEC Ltd. auditors adjusted downward the value of goodwill on the books of AEI Ltd. based on judgements that the actual value of the firm's goodwill to GEC Ltd. in the future was lower than that stated by AEI Ltd.
Goodwill has been viewed traditionally as a special type of intangible asset one that may not be amortized
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