Final answer:
Goodwill in a business acquisition is calculated by subtracting the fair value of the net assets of the acquired company from the fair value of the consideration exchanged for the company.
Step-by-step explanation:
When determining goodwill in a business acquisition, it's calculated as the fair value of the consideration exchanged for the company less the fair value of net assets acquired. To clarify, net assets are calculated as total assets minus total liabilities, where assets might include bank holdings, loans made, or securities purchased, and liabilities include what the bank owes to others such as deposits made by customers. Therefore, the correct answer to the question "In a business acquisition, goodwill equals the fair value of the consideration exchanged for the company ________." is 1) less the fair value of net assets acquired. This calculation does not involve adding the book value of assets acquired but considers the difference between what was paid for the acquisition and the fair market value of the identifiable net assets.