In recording the acquisition cost of an entire business
A)goodwill is recorded as the excess of cost over the fair value of identifiable net assets.
B)assets are recorded at the seller's carrying amounts.
C)goodwill, if it exists, is never recorded.
D)goodwill is recorded as the excess of cost over the carrying amount of identifiable net assets.

Question

Quizplus · Accepted Answer

Goodwill is recognized in accounting as the excess of the purchase price of a business over the fair value of its identifiable net assets at the time of acquisition. This represents the intangible value of the business, such as brand reputation, customer relationships, and intellectual property that are not individually identified and separately valued in the acquisition process.

In Recording the Acquisition Cost of an Entire Business