An intangible asset that represents the excess funds paid, when one firm merges with or purchases another, over and above the accounting value of the firm's net assets.
A) Current assets
B) Owners' equity
C) Goodwill
D) Appreciation

Question

Quizplus · Accepted Answer

Goodwill is an intangible asset that represents the excess amount paid for a company during a merger or acquisition. It is calculated as the difference between the purchase price and the accounting value of the net assets acquired. It represents the value of non-quantifiable assets such as brand recognition, customer loyalty, and reputation that the acquired company brings to the acquiring company. Choice A (current assets) refers to assets that can be easily converted into cash within a year, choice B (owners' equity) is the residual interest in the assets of a business after deducting liabilities, and choice D (appreciation) is the increase in the value of an asset over time.

An Intangible Asset That Represents the Excess Funds Paid, When