Asked by Jamilla Cason on Jul 03, 2024
Verified
In recording the acquisition cost of an entire business
A) goodwill is recorded as the excess of cost over the fair value of identifiable net assets.
B) assets are recorded at the seller's carrying amounts.
C) goodwill, if it exists, is never recorded.
D) goodwill is recorded as the excess of cost over the carrying amount of identifiable net assets.
Acquisition Cost
The total cost associated with acquiring an asset, including purchase price, installation fees, and other expenses necessary to prepare the asset for its intended use.
Entire Business
Refers to the complete operations and assets of a company as a single entity.
- Identify the characteristics and accounting methods for goodwill.
- Learn about the practices involved in allocating costs and reporting intangible assets in financial statements.
Verified Answer
RB
Reymi BatistaJul 08, 2024
Final Answer :
A
Explanation :
Goodwill is recognized in accounting as the excess of the purchase price of a business over the fair value of its identifiable net assets at the time of acquisition. This represents the intangible value of the business, such as brand reputation, customer relationships, and intellectual property that are not individually identified and separately valued in the acquisition process.
Learning Objectives
- Identify the characteristics and accounting methods for goodwill.
- Learn about the practices involved in allocating costs and reporting intangible assets in financial statements.