An Acquisition Transaction Results in $90,000 of Goodwill

question 118

Essay

An acquisition transaction results in $90,000 of goodwill. Several years later a worksheet is being produced to consolidate the two companies. Describe in words at what amount goodwill will be reported at this date.

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Definitions:

Cross-over Effect

The phenomenon where the success or attributes of one product or brand spills over to another within the same company.

Merchant Wholesaler

A business that buys goods in large quantities from manufacturers and resells them to retailers or other businesses.

Full-Service

Offering a complete range of services to meet all customer needs in a particular area, without requiring them to go elsewhere.

Merchant Wholesalers

Independently owned firms that take title to the merchandise they handle.