Sander's Auto recently purchased Auto Express for $9.8 million. Auto Express had a market value of $9.5 million at the time of acquisition. The additional $.3 million that Sander's Auto paid for Auto Express will be treated on Sander's Auto's balance sheet as which type of account?

Question

Quizplus · Accepted Answer

The additional amount paid above the market value of Auto Express is considered goodwill. Goodwill is an intangible asset that represents the value of a company's reputation, customer base, and other intangible factors. It is recorded on the balance sheet and represents the premium amount paid for the acquisition over the fair market value of the net assets.

Sander's Auto Recently Purchased Auto Express for $9