Suppose Dee's just acquired the assets of Flo's Flowers.The book value of Flo's Flowers assets was $68,000 but Dee's paid a total of $75,000.The additional $7,000 paid by Dee's will be recorded on Dee's balance sheet as:
A) accounts payable.
B) goodwill.
C) other current assets.
D) property, plant, and equipment.

Question

Quizplus · Accepted Answer

The additional $7,000 paid by Dee's over the book value of Flo's Flowers assets represents goodwill, which is an intangible asset that arises when a company acquires another company at a premium over its book value. This amount will be recorded on Dee's balance sheet as goodwill.

Suppose Dee's Just Acquired the Assets of Flo's Flowers