Goodwill is Multiple Choice Generally smaller for small companies and increases in amount as the companies acquired increase in size. Reported when the fair value of the acquiree is higher than the fair value of the net identifiable assets acquired. Seldom reported because it is too difficult to measure. Reported when more than book value is paid in purchasing another company.

Question

Renee Bryant

Business

21 November, 04:50

Goodwill is Multiple Choice Generally smaller for small companies and increases in amount as the companies acquired increase in size. Reported when the fair value of the acquiree is higher than the fair value of the net identifiable assets acquired. Seldom reported because it is too difficult to measure. Reported when more than book value is paid in purchasing another company.

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Kirsten Sweeney · Answer 1

Reported when the fair value of the acquiree is higher than the fair value of the net identifiable assets acquired.

Explanation:

Goodwill is associated with the purchase of one company by another.

To calculate goodwill, the fair value of the assets and liabilities of the acquired business (acquiree) is added to the fair value of business assets and liabilities. The surplus price over the fair value of net identifiable assets is what is known as goodwill. In other words, goodwill is that part of the purchase price that is greater than the sum of the net fair value of all of the assets purchased in the acquisition and the liabilities assumed in the process.

Therefore the correct answer is Reported when the fair value of the acquiree is higher than the fair value of the net identifiable assets acquired.