The Intangible Asset That Allows a Business to Earn a Higher

question 26

Multiple Choice

The intangible asset that allows a business to earn a higher return than a comparable business might generate with the same tangible assets is known as ______.

• A) intangible assets
• B) tangible assets
• C) preferred merchandise lines
• D) goodwill

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Definitions:

General Reserve

A reserve fund set aside out of profits for the purpose of strengthening the company's financial position and fulfilling future needs or contingencies.

Acquisition Excess

The amount by which the purchase price of an acquired asset or business exceeds its fair value, often recognized as goodwill.

Equity Method

An accounting technique used by firms to assess the profits earned by their investments in other companies, where the investment is recorded at cost and adjusted for the investor's share of the investee's profit or loss.

Realised Profit

Profit that has been made from completed transactions as opposed to estimated gains based on the current market valuation.