The Reason Goodwill Is Sometimes Referred to as a Master

question 67

Multiple Choice

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 identifiable 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.

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Definitions:

Superego

In psychoanalytic theory, the part of the personality responsible for moral standards and ideals, functioning to suppress the urges of the id and striving to act in a socially acceptable manner.

High Standards

Expectations or criteria that are significantly above average, often demanding excellence in performance or quality.

Rigid

Characterized by being inflexible or unyielding; not adaptable or flexible.

Defence Mechanism

Psychological strategies unconsciously used to protect a person from anxiety arising from unacceptable thoughts or feelings.