Goodwill
A)is the net value of the purchase price less the book value of the asset.
B)has economic value and can be sold to generate revenues.
C)can be generated internally.
D)only arises when businesses are combined.
E)all of the above

Question

Quizplus · Accepted Answer

Goodwill only arises when businesses are combined through a merger or acquisition. It is the excess of the purchase price over the fair value of the net assets acquired. Goodwill cannot be generated internally and it cannot be sold separately to generate revenues, but it can add economic value by increasing the overall value of the acquiring company. Therefore, options A, B, and C are incorrect.