Purchased goodwill represents
A) excess of price paid over fair value of net assets obtained in a combination.
B) excess of price paid over the book value of the net assets obtained in a combination.
C) the difference in the aggregate amount of the market prices of the stock of the combining companies.
D) a tangible asset.

Question

Quizplus · Accepted Answer

Purchased goodwill is the excess of the price paid for an acquisition over the fair value of the net identifiable assets acquired in the business combination. It represents intangible assets such as brand reputation, customer relationships, and intellectual property that do not have a physical presence but contribute to the future income of the company.

Purchased Goodwill Represents