Question

In a business combination, a company assigns the cost, where possible, to the identifiable tangible and intangible net assets, with the remained recorded as goodwill.

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Answer 1

In a business combination, the cost is allocated to identifiable assets, and the remaining amount is recorded as goodwill.

Step-by-step explanation:

In a business combination, a company assigns the cost, where possible, to the identifiable tangible and intangible net assets, with the remaining amount recorded as goodwill.

For example, let's say Company A acquires Company B for $1 million. Company B has identifiable tangible and intangible assets worth $800,000. Company A would assign this cost to those assets. The remaining $200,000 would be recorded as goodwill on Company A's balance sheet.

Goodwill represents the premium paid for acquiring Company B.