Question

When a company purchases another company and the purchase price is greater than the fair value of the net assets acquired, this excess is referred to as ______.

Answer 1

Goodwill

Step-by-step explanation:

Goodwill is an intangible asset, reported on the balance sheet asset side. It is used yearly for the impairment tests.

When the company purchase another company and its purchase price is more than the fair value of the net asset so the excess amount would be called as a goodwill

The fair value of the net asset is come from subtracting the

= Company assets - company liabilities