The duality of goodwill assessment in financial accounting and reporting

Subject. This article considers Goodwill as an indicator of the organization's market capitalization and internally created Goodwill as a set of transaction expenses, and discusses the dual nature of Goodwill as an economic resource of the organization. Objectives. The article aims to explore the economic content of the Goodwill category and interpret it in terms of accounting considering differences in the measurement of Goodwill value as a result of a business merger transaction and internally created Goodwill that shapes its value by capitalizing transaction expenses. The article also aims to prove the need to reflect Goodwill in financial statements as an indicator of the organization's market capitalization and internally created Goodwill as a set of transaction expenses. Methods. To methodologically substantiate the economic category of Goodwill, we used the Conceptual Framework for Financial Reporting, International Concept of Integrated Reporting, institutional economics, and the International Financial Reporting Standards. Results. The article proves the dual nature of the economic category of Goodwill, which is crucial in the development of the methodological provision of this category in the organization's accounting and financial reporting system and the assessment of its value. Conclusions. Lack of transparency in the financial statements of individual economic entities and consolidated reporting of the group's enterprises allows for combining different economic resources in one item, for example, Intangible Assets. The inclusion of Goodwill, which is the result of a business merger transaction, does not correspond to its economic content, as Goodwill in this case is part of the investment made by the investor in the object of investment. Even for this reason alone, this figure should be reflected in the structure of financial capital.