According to Johnson and Petrone (1998), which of the following is not a component of goodwill?
A) Overpayment by the acquirer.
B) Overvaluation of the consideration paid by the acquirer.
C) Excess of the book values over the fair values of the acquiree's recognised assets.
D) Excess of the fair values over the book values of the acquiree's recognised assets.

Question

Quizplus · Accepted Answer

Goodwill is generally considered as the excess of the purchase price over the fair value of the net assets (assets minus liabilities) acquired in a business combination. Therefore, it involves the excess of the fair values over the book values of the acquiree's recognized assets (D), not the excess of book values over the fair values (C).

According to Johnson and Petrone (1998), Which of the Following