Goodwill arises when the fair market value paid in an acquisition is greater than the fair market value of the identifiable net assets.

Question

Quizplus · Accepted Answer

This is correct. Goodwill is created when the amount paid for an acquisition is more than the fair market value of the net assets that can be identified. Goodwill represents the intangible value of a company, such as its reputation, brand value, customer base, intellectual property, etc.

Goodwill Arises When the Fair Market Value Paid in an Acquisition