If the acquisition cost exceeds the current value of the net assets (assets minus liabilities) acquired, the investor must also be purchasing an intangible asset arising from attributes that are not separable from the business-such as customer satisfaction, product quality, skilled employees, and business location.

Question

Quizplus · Accepted Answer

This statement is true. When the acquisition cost exceeds the current value of net assets, the excess amount is recorded as goodwill, which represents the intangible assets mentioned in the statement.

If the Acquisition Cost Exceeds the Current Value of the Net