From J. Neworth to L.R. Dicksee: a brief overview of the studies on goodwill from the first known mention in literature until the end of the 19th century
Subject The article discusses the genesis of views on the economic substance of goodwill and its valuation. In addition, the article addresses goodwill recognition in financial statements of the acquiring company, and subsequent accounting. The article deals with the period from the date of the first known mention of the term 'goodwill' in the will of J. Neworth (November 5, 1571) to the publication date of the first book devoted entirely to accounting for goodwill (1897). Objectives The purpose of the article is to acquaint the professional accounting community with the history of accounting for one of the most unusual and mysterious assets, i.e. goodwill. Results I have studied a great number of source publications and found out that the earliest mention of goodwill in legal texts and literary works belonged to P.D. Leake in his monumental work Commercial Goodwill: its History, Value, and Treatment in Accounts (1921). I point out that the majority of researchers, from the twentieth century to modern times, of the history of views on the goodwill evolution mention those views, often without any reference to Leake's work, though in terms of citations and bibliographic description, it is clear that the quotes proceed from Leake's works. The article contains a full bibliographic description of the sources quoted by Leake; some quotes are more complete with my personal comments on them. I also show photographs of the original texts that contain the earliest mention of goodwill (1571, 1766, 1786, 1863). The article also includes the description and analysis of views of the most famous researchers of goodwill from the late 19th to the early 20th century, such as W. Harris, F. More, G.E.S Whatley, L.R. Dicksee, etc. The article specifies that during this period there was a broad diversity of opinions on the nature, valuation and accounting treatment of goodwill. Conclusions and Relevance The article may be useful for everyone interested in the history of accounting, in particular, the history of ideas about goodwill.
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