Goodwill does not have to be present in a business combination, but the presence of goodwill is compelling evidence of the acquisition of a business.

Question

Quizplus · Accepted Answer

Goodwill is recognized in a business combination when the purchase price exceeds the fair value of the net identifiable assets acquired. It's not necessary for every business combination to have goodwill; it depends on the valuation of the assets and liabilities. However, the presence of goodwill often indicates that a business has been acquired, as it reflects the value of intangible assets like brand reputation, customer relationships, and future economic benefits that are not separately identifiable.

Goodwill Does Not Have to Be Present in a Business