The reason goodwill is sometimes referred to as a master valuation account is because
a. it represents the purchase price of a business that is about to be sold.
b. it is the difference between the fair value of the net tangible and identifiable intangible assets as compared with the purchase price of the acquired business.
c. the value of a business is computed without consideration of goodwill and then goodwill is added to arrive at a master valuation.
d. it is the only account in the financial statements that is based on value, all other accounts are recorded at an amount other than their value.
Answer: b. it is the difference between the fair value of the net tangible and identifiable intangible assets as compared with the purchase price of the acquired business.
You might also like to view...
The market rewards firms that adopt a constant dividend payout policy rather than a fixed or increasing level of dividends through higher share prices
Indicate whether the statement is true or false
Label-switching routers bring ________
A) lower cost B) the ability to do traffic engineering C) quality of service D) all of the above