Goodwill arising in a business combination is classified as a(n) :

A) asset.
B) liability.
C) expense associated with the acquisition.
D) item in equity.

Question

Goodwill arising in a business combination is classified as a(n) :A)  asset.B)  liability.C)  expense associated with the acquisition.D)  item in equity.

Nishan Shrestha · Accepted Answer

Final Answer : A, Explanation :  Goodwill arising in a business combination is classified as an asset because it represents the excess of the purchase price over the fair value of the identifiable net assets acquired. It reflects the future economic benefits expected to arise from the synergies resulting from the combination of the two companies.

Goodwill arising in a business combination is classified as a(n) :

A) asset.
B) liability.
C) expense associated with the acquisition.
D) item in equity.

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Learning Objectives

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