Question : The value of goodwill can be defined as excess of amount paid for business over and above its……..
Option 1: Total assets
Option 2: Current assets
Option 3: Net assets
Option 4: None of these
Answer (1)
7th Jan, 2024
Correct Answer: Net assets
Solution : Answer = Net assets
The value of goodwill represents the amount paid for a business in excess of its net assets. It reflects intangible assets such as reputation, customer loyalty, and brand recognition. Therefore, goodwill is calculated by subtracting the fair value of identifiable net assets from the total purchase price of the business.
Hence, the correct option is 3.
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