The Six Relationships between Goodwill and Core Competence of Corporation—Review of Research on Goodwill Accounting

Goodwill and core competence of the corporation are two concepts and they are easy to be confused, moreover, it uneasy to differentiate the source of advantages gained by the corporate, and also leads to a serious distortion between the value of the corporation acknowledged by market and the record value of accounting. This paper analyses the substance of goodwill and that of corporate core competence before coming to the conclusion that goodwill is a kind of combined intangible asset while core competence is a reluctant intangible asset, which means that both goodwill and core competence of the corporate belong to intangible assets, but the composing factors are inter-crossing and inter-containing. Moreover, goodwill and core competence have similar characters and there are also some relationships between them, such as succession ＆ development, abstract ＆ concrete, and superficiality ＆ essence as well. At the same time, there are some distinct differences between them in the following aspects： origination of research, initial definition, research background and theoretical basis, composing factors, value identified and measurement methods, way of value manifested, principle of value contribution and its accounting, etc. In the end, this paper comes to the conclusion that it is core competence that stands for the capability to gain advantages profit while goodwill is only a purchasing price margin, which is the balance of the exchanging value and book value of the net assets of the enterprise purchased. So, the core competence theory should be combined into goodwill accounting so as to establish core competence accounting, which will manifest the source of advantages gained by the corporation.