Goodwill
Goodwill is an intangible asset that arises when a company acquires another for a price higher than the fair value of its net assets. It covers non-physical assets like customer relationships, intellectual property and brand reputation.
Example
If Company A buys Company B for $50, but company B’s net assets (assets - liabilities) are worth $40, the $10 excess is recorded as goodwill.
In the room
Goodwill is the plug in purchase accounting, and it comes up whenever interviewers push into M&A mechanics. Pay more than the fair value of net assets and the difference lands here — which is also why goodwill impairments signal a deal that didn't work out.