Firm a Acquires Firm B When Firm B Has a Book

question 31

Multiple Choice

Firm A acquires Firm B when Firm B has a book value of assets of $155 million and a book value of liabilities of $35 million.Firm A actually pays $175 million for Firm B. This purchase would result in goodwill for Firm A equal to

• A) $175 million
• B) $155 million
• C) $120 million
• D) $55 million Book Value of B = $155 - $35 = $120; Firm A pays $175, goodwill = $175 - $120 = $55

---

Definitions:

Competence

The ability of an individual or organization to effectively perform or carry out a specific task or activity.

Entrepreneurial Culture

Describes a business environment that promotes innovation, takes calculated risks, and supports the creation and growth of new ventures.

New Ventures

Refers to newly established businesses or startups that are engaged in the process of entering a market and implementing a novel business plan.

High-Potential Ventures

Businesses or projects with strong growth prospects and the potential for significant financial returns.