A feature of the purchase method of accounting includes the difference between the purchase
price and the estimated fair market value of the net assets of the target ﬁrm must be classiﬁed as
goodwill and recorded on the balance sheet.

Question

Quizplus · Accepted Answer

This statement is true. According to the purchase method of accounting, any difference between the purchase price and the estimated fair market value of the net assets of the target firm must be classified as goodwill and recorded on the balance sheet.

A Feature of the Purchase Method of Accounting Includes the Difference