The inclusion of the intangible asset goodwill in the financial statements of a company indicates:
A)That the company has a favorable reputation with its customers.
B)A monopoly position in the industry or superior management.
C)An unbroken record of annual earnings and dividends.
D)That the company has purchased a going business at a price in excess of the fair market value of the net identifiable assets.

Question

Quizplus · Accepted Answer

Goodwill is an intangible asset that represents the excess purchase price paid by a company to acquire another business over and above the net identifiable assets of that business. In other words, it indicates that the company has paid more than the fair market value of the acquired company's tangible assets such as property, plant, and equipment, and identifiable intangible assets such as patents and trademarks. Therefore, the best choice is D.

The Inclusion of the Intangible Asset Goodwill in the Financial