When the Purchase Price of Another Entity Exceeds the Book

question 87

Short Answer

When the purchase price of another entity exceeds the book value of the entity's net assets the purchaser allocates the excess to identifiable assets and liabilities in order to revalue them to market value and any additional excess is allocated to ____________________.

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Definitions:

Consequentialism

An ethical theory that judges the rightness or wrongness of an action based on the outcomes or consequences it produces.

Calculations

The process of computing by mathematical operations.

Utilitarian Theory

An ethical theory suggesting that the best action is the one that maximizes utility, typically defined as that which produces the greatest well-being of the greatest number of people.

Long-term Results

Outcomes or effects that manifest or become evident over an extended period.