Brynlee Paid $500,000 for a Company,$100,000 in Excess of the Book

question 1

Multiple Choice

Brynlee paid $500,000 for a company,$100,000 in excess of the book value.Brynlee has ______.

• A)$100,000 of expenses
• B)$100,000 of intangible assets
• C)goodwill of $100,000
• D)debt of $100,000

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Definitions:

Incremental Borrowing Rate

The interest rate a lessee would have to pay to borrow on a collateralized basis over a similar term the funds necessary to purchase an asset.

Capital Lease

A lease agreement that grants a lessee control over an asset for a substantial portion of its useful life, and is recorded as an asset and liability on the balance sheet.

Lease Rate

The amount charged under a lease agreement for the use of an asset, often expressed as a payment amount per period.

Sales-Type Capital Lease

A leasing agreement in which the lessor recognizes immediate sales revenue and profit, reflecting the transaction as a sale rather than a rental.