What is goodwill in accounting? a) The value of a company’s brand and reputationb) The excess of the fair value of assets acquired over their book valuec) The amount a company earns from its operationsd) The cost of capital used in financing a business

What is goodwill in accounting? a) The value of a company’s brand and reputationb) The excess of the fair value of assets acquired over their book valuec) The amount a company earns from its operationsd) The cost of capital used in financing a business

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter4: The Balance Sheet And The Statement Of Shareholders' Equity

Section: Chapter Questions

Problem 1RE

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Question

What is goodwill in accounting?

a) The value of a company’s brand and reputation
b) The excess of the fair value of assets acquired over their book value
c) The amount a company earns from its operations
d) The cost of capital used in financing a business

Definition Definition Intangible asset that includes proprietary or intellectual property and brand value of a firm. Goodwill is recorded in the books when a firm purchases another firm and the purchase price is more than the fair value of net identifiable assets of the acquired business. The amount of goodwill is recorded on the asset side of the balance sheet (statement of financial position).

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