What Is the Amount of Goodwill Arising from This Business

question 19

Multiple Choice

What is the amount of goodwill arising from this business combination?

• A) ($5,000).
• B) Nil.
• C) $5,000.
• D)$150,000.

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Definitions:

Internal Rate of Return (IRR)

The discount rate that makes the net present value (NPV) of all cash flows from a particular project zero, used to assess the profitability of potential investments.

Mutually Exclusive Project

Projects where the acceptance of one project means the others cannot be pursued due to constraints like budget, resources, or project scope.

Net Present Value (NPV)

Net Present Value is the difference between the present value of cash inflows and outflows over a period of time, used in capital budgeting to assess the profitability of an investment.

Present Value

The worth at present of future monetary sums or cash flow streams, evaluated with a preset rate of return.