Goodwill Can Be Recorded as an Asset When A(n)

question 51

Multiple Choice

Goodwill can be recorded as an asset when a(n)

• A)business has above normal profitability compared to other businesses in its industry.
• B)business can determine that it has created customer goodwill and name recognition.
• C)offer is received to purchase the business at a price in excess of the value of the assets.
• D)business is purchased and payment is made in excess of the value of the net assets.

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Definitions:

FMV

Fair Market Value; the price an asset would sell for on the open market under current conditions.

Donor's Adjusted Basis

The amount used in determining capital gain or loss for the donor, typically the cost basis adjusted for various factors like improvements or depreciation.

Ordinary Gains

Ordinary gains refer to earnings from the sale of assets or property that are not classified under capital gains and are subject to the taxpayer's normal income tax rate.

Accounts Receivable

Money owed to a business by its customers for goods or services delivered but not yet paid for.