Which One of the Following Is NOT True About Goodwill

question 6

Multiple Choice

Which one of the following is NOT true about goodwill?

• A) It is an intangible asset.
• B) It represents the value of all unrecorded assets acquired in a merger.
• C) It equals the premium paid over the fair market value of the assets acquired in a merger.
• D) When goodwill appears on a company's balance sheet, it reduces the company's net worth by that amount.

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Definitions:

Market Outcome

The result of all buyers' and sellers' interactions in a market, determined by factors like price, quantity, and quality of goods and services.

External Costs

External costs, also known as negative externalities, are the costs experienced by third parties who are not involved in an economic transaction, often not reflected in market transactions.

Market Price

The market price at which you can currently buy or sell a service or asset.

Efficient Equilibrium

A state in an economy where every resource is optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.