Goodwill is a key intangible asset that represents the portion of the business value that cannot be attributed to other business assets.
For example, Facebook Inc. FB bought the domain name fb.com for USD 8.5 million from American Farm Bureau Federation. Apparently, this domain name did not have any other benefit than name. Thus whole amount paid can be considered as goodwill and Facebook would recognize it on its balance sheet. However, before the acquisition American Farm Bureau Federation could not recognize it on its balance sheet.
Goodwill is, therefore, something which cannot be described easily but in general refers to good name, reputation, and wide ranging business connections which are helpful for the business in gaining more profits than what could have been otherwise earned. Moreover, goodwill is an attractive force aiming at bringing back the customers to old place of business.