Under the Acquisition Method of Accounting for a Business Combination

question 38

Multiple Choice

Under the acquisition method of accounting for a business combination, goodwill is equal to

• A) The acquired company's ability to generate excess profits.
• B) The excess of the cost of the acquisition plus the fair value of the noncontrolling interest over the fair value of the acquiree's net assets.
• C) The excess of the cost of the acquisition over the fair value of the acquiree's net assets.
• D) The excess of the fair value of acquiree's net assets over the cost of acquisition.

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