Final answer:
On a corporate balance sheet, goodwill represents intangible assets from previous acquisitions, reflecting the value of non-physical assets that contribute to future earnings.
Step-by-step explanation:
The existence of goodwill on a corporate balance sheet indicates that the corporation has intangible assets from past acquisitions. Goodwill is an accounting term for the premium paid over the fair value of the assets during the acquisition of another company. If a company buys another company for more than the sum of the fair value of its net identifiable assets, the excess is recorded as goodwill on the buyer's balance sheet. Goodwill reflects the value of factors such as brand reputation, customer relationships, and intellectual property - all of which contribute to future earnings that are not directly attributable to any physical or financial asset.
It's important to note that goodwill does not indicate past profitability or depreciated tangible assets, as it specifically represents the value of acquired intangible assets.