Goodwill is measured as the difference between the:
A) cost of the assets given up, and the cost of the net assets acquired.
B) cost of the net assets acquired, and the net present value of the consideration given up.
C) present value of the consideration transferred, and the present value of the net assets acquired
D) fair value of the consideration transferred, and the fair value of the assets and liabilities acquired.

Question

Quizplus · Accepted Answer

Goodwill is measured as the excess of the fair value of consideration transferred over the fair value of the assets and liabilities acquired. This is because goodwill represents the value of the business that cannot be attributed to identifiable assets and liabilities. Option A is incorrect as it compares cost, not fair value. Option B is incorrect because net present value is not relevant in measuring goodwill. Option C is also incorrect because it compares present values, not fair values.

Goodwill Is Measured as the Difference Between The