A ________ is an intangible asset. (Fill in the blank by choosing correct option)
a) goodwill
b) stock
c) building
d) cash
Answers
Answer:
The correct option to the given question is option (a) goodwill.
Explanation:
Goodwill of a company is considered as a non-tangible asset because it is not a physical asset.
Goodwill is that value on which a company buys another companies assets, on higher value than the fair market values of those assets.
Goodwill is maintained or recorded in the assets section of balance sheets of the company.
Answer:
(A) Goodwill is an intangible asset.
Explanation:
Option (A) Goodwill is the correct answer.
Goodwill is related to the purchase between companies. Mostly, in the situation when the total fair value of assets (tangible or intangible) is lower than the purchasing price. Goodwill purchased in the acquisition and the presume liabilities. In goodwill, the value of a company's brand name, relations with customers and employees, and have a solid customer base are the main pillars of Goodwill.
Goodwill formula and calculation:
Goodwill = P - (A + L)
Where,
P = Purchase Price
A = Market value of Assets
L = Market value of Liabilities