Goodwill is recognized when _____.
A)a company's actual earnings exceeds competitor's earnings
B)a company's actual earnings exceeds budgeted earnings
C)the purchase price of a company exceeds the fair market value of its net identifiable assets
D)the purchase price of a company exceeds the book value of its net identifiable assets

Question

Quizplus · Accepted Answer

Goodwill is recognized in accounting when the purchase price of a company exceeds the fair market value of its net identifiable assets. This represents the intangible value of the company, such as brand reputation, customer relationships, and intellectual property, which are not directly quantifiable.

Goodwill Is Recognized When _____