Purchased Goodwill Is Recognised as the Amount Of

question 13

Multiple Choice

Purchased goodwill is recognised as the amount of:

• A) the excess of the cost of acquisition incurred by an acquirer over the fair value of the identifiable net assets acquired.
• B) the difference between the cost of acquisition of a subsidiary and the realisable value of net assets of the subsidiary.
• C) the lower of the sum of related expenditures on advertising and promotion undertaken in the last 2 years by the subsidiary being purchased and the independent valuation of the market value of that subsidiary's goodwill.
• D) the excess of the cost of acquisition incurred by an acquirer over the fair value of the identifiable net assets and contingent liabilities acquired.

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Definitions:

Interest Payment

The amount paid over a period for borrowing money or delaying the repayment of a debt, typically expressed as an annual percentage of the principal.

Maturity Date

The date on which a financial obligation or investment becomes due for payment or expires, marking the end of its term.

Bank Loan

A bank loan is a sum of money lent by a bank to a borrower at an agreed interest rate and repayment schedule.

Promissory Note

A written promise to pay a specified sum of money to a designated person or bearer at a fixed or determinable future time.