More like the thing was valued at $1m but if you add up all the assets and liabilities of the thing you only get $500k. Obviously when you're a capitalist and b

More like the thing was valued at $1m but if you add up all the assets and liabilities of the thing you only get $500k. Obviously when you're a capitalist and buy something, you're doing so for future cash flows, but those don't show up on a balance sheet. Still, the accounting identity must hold, cash can't just disappear, so you end up recording it as goodwill.