Goodwill is equal to the excess of the cost of an acquired company over the sum of the:

Question

Quizplus · Accepted Answer

Goodwill represents the premium paid to acquire a company beyond its net assets. The net assets are determined by subtracting the liabilities from the assets of the acquired company, and the market value of these net assets is considered the fair value of the company. Goodwill is calculated by subtracting the fair value of the net assets from the purchase price. Therefore, option A is the correct answer.

Goodwill Is Equal to the Excess of the Cost of an Acquired