The Reason Goodwill Is Sometimes Referred to as a Master

question 165

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 tangible and identifiable intangible assets and 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:

Future Generations

The subsequent generations of people who will live after the current one and whose well-being is considered in long-term planning and environmental conservation.

Specific Environment

The unique external forces and conditions, including competitors, customers, and regulatory bodies, that directly affect how an organization operates.

Task Environment

The immediate external environment that directly influences an organization’s operations, including competitors, suppliers, and customers.

Stakeholders

Individuals or groups with an interest or concern in a business, project, or endeavor, whose outcomes may affect or be affected by the actions of the business or project.