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:

Surety

Surety is a financial guarantee provided by a third party, promising to pay a debt or perform an obligation if the primary party fails to do so.

Electronic Chattel Paper

A digital form of chattel paper, which includes any record or evidence of an obligation and a security interest in specific goods.

Security Interest

A financial interest in a piece of property, granted to a creditor, ensuring claim to the property should the debtor default on their obligation.

Automatic Perfection

A legal condition in which a security interest in a collateral automatically becomes effective without the need for any further action, under certain conditions, once it attaches.