The excess of the purchase price of a business over the fair values of the identifiable net assets acquired is a measure of:
A) fair value.
B) revaluation surplus.
C) purchased goodwill.
D) improvements.

Question

Quizplus · Accepted Answer

The excess of the purchase price over the fair value of the identifiable net assets is referred to as purchased goodwill. This represents the value of the company's reputation, customer base, and other intangible assets that are not separately identifiable. Option A is incorrect as fair value is already considered while calculating the excess purchase price. Option B refers to the increase in carrying value of assets after revaluation, which is not applicable here. Option D is incorrect as it does not accurately describe the excess purchase price.

The Excess of the Purchase Price of a Business Over