Which one of the following items increases the amount of goodwill recognized in an acquisition? A....
Which one of the following items increases the amount of goodwill recognized in an acquisition?
| A. |
Payments offered to employees of the acquired company that are based on their future performance |
|
| B. |
Consulting fees paid to Goldman Sachs |
|
| C. |
Registration fees the acquiring company pays to issue new stock in an acquisition |
|
| D. |
An earnout added to an acquisition agreement to motivate the acquired company’s shareholders to sell |
Homework Answers
Option D is the answer
Goodwill is a plug variable which is recorded on the acquiring company's books when it acquires another by paying more than what its fair value of net identifiable assets are worth.
Additional amount paid to motivate the acquired company's shareholders to sell constitutes for the increase in goodwill as per definition above.
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Which one of the following items increases the amount
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