This article first analyzes three accounting methods for purchased goodwill accounting treatment in some countries,and then points out their theoretical unfitness and realistical shortcoming, and finally suggests that goodwill should be recognized as a kind of permanent asset.

After analyzing the difference between self-generated goodwill and purchased goodwill,the paper focuses on the inherent unity of the both.

As the acquired is traded as an organic whole in mergers and acquisitions, the price the acquirer pays is often greater than the fair price of the identifiable net assets of the acquired, thus forming purchased goodwill.

Internally generated goodwill, externally purchased goodwill and negative goodwill should be related to a particular accounting entity.

There are three different opinions on how to handle purchased goodwill:① Recognize and amortize an asset during the period of expected validity; ② Directly counteract the shareholder s ownership; ③ Regard as a lasting asset unless it is obviously impaired.

There are three methods of accounting for purchased goodwill: systematic amortization, capitalization without amortization, and immediately write-off against equity.

In general, the difference between the cost of acquisition and fair value of net assets of business share is confirmed as purchased goodwill.

Consolidated goodwill is the banlance that investment cost of parent corporation invested to subsidiary corporations higher than the net assets of subsidiary corporations.