How is goodwill calculated and why is it import... - SS2 Accounting Valuation of Goodwill Question

Goodwill is calculated by subtracting the fair market value of a company's net identifiable assets from its total enterprise value. This provides an estimate of the value of the company's intangible assets, including its reputation, brand recognition, and customer relationships. Goodwill is important for a company's overall valuation because it represents the value of the company's intangible assets, which can be a significant part of its overall worth.