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which of the following best describes the accounting for goodwill acquired in business acquisition? a. Goodwill...

which of the following best describes the accounting for goodwill acquired in business acquisition?

a. Goodwill can be recorded by a company when it can demonstrate that the company has generated excess market value directly attributable to its strong reputation

b. Goodwill is recorded as an asset when the purchaser of a business believes that the purchased business has a good reputation among its customers

c. Goodwill is recorded as an asset when the purchaser of a business pays less than the fair value of the net assets acquired

d. Goodwill is recorded as an asset when the purchaser of a business pays more than the fair value of the net assets acquired
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Answer #1

ANSWER IS OPTION D. Goodwill is recorded as an asset when the purchaser of a business pays more than the fair value of the net assets acquired, since goodwill is recognised in the books of purchaser when the value of net assets is less than purchase consideration and in the case of net assets is more than the value of consideration the excess amount is recorded as CAPITAL RESERVE in the books of purchaser.

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