Stephen'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 $0.3 million that Stephen's Auto paid for Auto Express will be treated on Stephen's Auto's balance sheet as which type of account?
A)patent
B)depreciation
C)licenses
D)goodwill
E)acquisition expense

Question

Quizplus · Accepted Answer

Goodwill represents the amount paid for a company over its fair market value, and it is recorded as an intangible asset on the balance sheet. In this scenario, Stephen's Auto paid an additional $0.3 million over Auto Express's market value, and that excess amount represents goodwill.

Stephen's Auto Recently Purchased Auto Express for $9