Purchased Goodwill Is Recognised as the Amount Of

question 41

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 of another entity by an acquiring entity over the recoverable value of the identifiable net assets acquired.
• E) 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:

Initial Capital Requirements

The initial amount of money needed to start a business or investment, covering costs like equipment, inventory, and leasing.

Long-Term Assets

Are resources or investments owned by a company expected to provide value for more than one year, such as land, buildings, machinery, and intellectual property.

Guarantors

Individuals or entities that agree to be responsible for another's debt or obligations if the original party fails to meet its terms.

Loan Endorsers

Individuals or entities that support or guarantee the repayment of a loan, thereby assuming the risk if the original borrower fails to repay.