When the investor pays $100,000 to acquire 40% of a company's outstanding voting shares at a time when the fair value of the company's net assets are $175,000, the resulting goodwill amount is $30,000. True or False True False

When the investor pays $100,000 to acquire 40% of a company's outstanding voting shares at a time when the fair value of the company's net assets are $175,000, the resulting goodwill amount is $30,000. True or False True False

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

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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