Goodwill is:
A)the difference between the purchase price over the fair market value of the target firm's equity.
B)the difference between target firm's book value of assets over the book value of debt.
C)the difference between the purchase price over the book value of the target firm's equity.
D)an increase in the target's stock price when a possible acquisition is announced.

Question

Quizplus · Accepted Answer

Goodwill is the difference between the purchase price and the fair market value of the target firm's equity. It represents intangible assets such as brand reputation, customer relationships, and intellectual property that are not explicitly priced out during the acquisition.

Goodwill Is