Following an acquisition, the acquiring firm's statement of financial position shows an asset labeled "goodwill." What form of merger accounting is being used?
A) Consolidation
B) Aggregation
C) Purchase
D) Pooling

Question

Quizplus · Accepted Answer

Goodwill on the balance sheet typically arises from the purchase method of accounting for a merger or acquisition, where the acquiring company pays a premium over the target company's book value.

Following an Acquisition, the Acquiring Firm's Statement of Financial Position