Which of the following defines goodwill resulting from an acquisition?
A)The historical value of the stock received less the current value of the stock issued.
B)The excess purchase price over the fair value of the entity acquired.
C)The difference between the designated market value and the book value of the target company.
D)The amount of the contingent performance obligation less the purchase price adjustment made upon signing the letter of intent.

Question

Quizplus · Accepted Answer

Goodwill resulting from an acquisition is the excess purchase price paid over the fair value of the entity acquired. This represents the value of intangible assets such as reputation, brand, customer loyalty, etc. that are not reflected in the fair value of the assets and liabilities acquired. Option A, C, and D are incorrect as they do not define goodwill resulting from an acquisition.

Which of the Following Defines Goodwill Resulting from an Acquisition