Asked by Jackson Carriere on Feb 18, 2024
Verified
Brynlee paid $500,000 for a company,$100,000 in excess of the book value.Brynlee has ______.
A) $100,000 of expenses
B) $100,000 of intangible assets
C) goodwill of $100,000
D) debt of $100,000
Goodwill
The price paid for an asset in excess of its book value. You will see this on the balance sheet when the company has made one or more large acquisitions.
- Understanding the concept of book value and its relationship to the purchase price.
- Recognizing the difference between the purchase price and the book value as excess payment.
- Identifying the impact of the excess payment on Brynlee's financial position.
Verified Answer
CS
Courtney SeibelFeb 18, 2024
Final Answer :
C
Explanation :
Goodwill is the amount paid for a company above its book value, reflecting intangible assets such as brand recognition, customer loyalty, and reputation. Therefore, Brynlee has created goodwill worth $100,000.
Learning Objectives
- Understanding the concept of book value and its relationship to the purchase price.
- Recognizing the difference between the purchase price and the book value as excess payment.
- Identifying the impact of the excess payment on Brynlee's financial position.
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