menu
bartleby
search
close search
Hit Return to see all results
close solutoin list

You are an accounting student at your local university. Your brother has recently managed to save $5,000, and he would like to invest some of this money in the stock market, so he’s researching various global corporations that are listed on the stock exchange. He is reviewing a company that has “Goodwill” as an item on the balance sheet. He is quite perplexed about what this means, so he asks you for help, knowing that you are taking accounting classes. How would you explain the concept of goodwill to him by comparing it to other types of resources the company has available?

FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 11, Problem 1TP
Textbook Problem
1 views

You are an accounting student at your local university. Your brother has recently managed to save $5,000, and he would like to invest some of this money in the stock market, so he’s researching various global corporations that are listed on the stock exchange. He is reviewing a company that has “Goodwill” as an item on the balance sheet. He is quite perplexed about what this means, so he asks you for help, knowing that you are taking accounting classes. How would you explain the concept of goodwill to him by comparing it to other types of resources the company has available?

To determine

Introduction:

Goodwill is an intangible asset which is recorded at the time when a company purchases another company for a price higher than the net asset value of the purchased company.

To explain:

Themeaning of goodwill as compared to other type of resouces of the company.

Explanation of Solution

Goodwill is an intangible asset it is recorded in the books when it is purchased in the case of business combinations. In case the consideration paid for a business is higher than the value of its net asset, the difference is recorded as goodwill.

For example, in case, Company A purchased Company B for $1,000,000 and the value of net assets of Company B is $900,000, then in this case $100,000 ($1,000,000$900,000) would be recorded as goodwill.

This $100,000 represents intangible benefits expected from purchase of Company B like customer contacts

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Chapter 11 Solutions

Principles of Accounting Volume 1
Show all chapter solutions
add
Ch. 11 - How are intangible assets with an indefinite life...Ch. 11 - If the market value of goodwill is found to be...Ch. 11 - Which of the following represents an event that is...Ch. 11 - Which of the following is true regarding special...Ch. 11 - The loss in value from all causes within a...Ch. 11 - What is the difference between tangible and...Ch. 11 - Define intangible assets.Ch. 11 - What is the difference between a patent and a...Ch. 11 - What is goodwill, and how is it generated?Ch. 11 - For each of the following transactions, state...Ch. 11 - What amounts should be recorded as a cost of a...Ch. 11 - Describe the relationship between expense...Ch. 11 - Define natural resources.Ch. 11 - Explain the difference between depreciation,...Ch. 11 - Explain the differences between the process of...Ch. 11 - What is goodwill, and what are the unique aspects...Ch. 11 - What are some examples of special issues in...Ch. 11 - What is the difference between functional...Ch. 11 - Fombell, Incorporated has the following assets in...Ch. 11 - Jada Company had the following transactions during...Ch. 11 - Montello Inc. purchases a delivery truck for...Ch. 11 - Montello Inc. purchases a delivery truck for...Ch. 11 - Steele Corp. purchases equipment for $25,000....Ch. 11 - Calico Inc. purchased a patent on a new drug. The...Ch. 11 - Alfredo Company purchased a new 3-D printer for...Ch. 11 - Using the information from EA7, calculate...Ch. 11 - Santa Rosa recently purchased a new boat to help...Ch. 11 - Warriors Productions recently purchased a...Ch. 11 - The following intangible assets were purchased by...Ch. 11 - Sand River Sales has a fork truck used in its...Ch. 11 - New Carlisle, Incorporated, has the following...Ch. 11 - Johnson, Incorporated had the following...Ch. 11 - Montello Inc. purchases a delivery truck for...Ch. 11 - Montello Inc. purchases a delivery truck for...Ch. 11 - Steele Corp. purchases equipment for $30,000....Ch. 11 - Calico Inc. purchased a patent on a new drug it...Ch. 11 - Kenzie purchased a new 3-D printer for $450,000....Ch. 11 - Using the information from EB7, calculate...Ch. 11 - Ronson recently purchased a new boat to help ship...Ch. 11 - Warriors Production recently purchased a copyright...Ch. 11 - The following intangible assets were purchased by...Ch. 11 - Baglias Wholesale Trinkets has a 3-D printer used...Ch. 11 - Selected accounts from Phipps Corporations trial...Ch. 11 - Selected accounts from Han Corporations trial...Ch. 11 - During the current year, Alanna Co. had the...Ch. 11 - During the current year, Arkells Inc. made the...Ch. 11 - Jada Company had the following transactions during...Ch. 11 - Gimli Miners recently purchased the rights to a...Ch. 11 - Tree Lovers Inc. purchased 100 acres of woodland...Ch. 11 - Referring to PA7 where Kenzie Company purchased a...Ch. 11 - For each of the following unrelated situations,...Ch. 11 - Buchanan Imports purchased McLaren Corporation for...Ch. 11 - Montezuma Inc. purchases a delivery truck for...Ch. 11 - Garcia Co. owns equipment that costs $76,800, with...Ch. 11 - Colquhoun International purchases a warehouse for...Ch. 11 - Selected accounts from Hanna Corporations trial...Ch. 11 - Selected accounts from Boxwood Corporations trial...Ch. 11 - During the current year, Alanna Co. had the...Ch. 11 - During the current year, Arkells Inc. made the...Ch. 11 - Johnson, Incorporated, had the following...Ch. 11 - Underwoods Miners recently purchased the rights to...Ch. 11 - Tree Lovers Inc. purchased 2,500 acres of woodland...Ch. 11 - Montello Inc. purchases a delivery truck for...Ch. 11 - Prepare the assets section of the balance sheet as...Ch. 11 - For each of the following unrelated situations,...Ch. 11 - On May 1, 2015, Zoe Inc. purchased Branta Corp....Ch. 11 - Farm Fresh Agriculture Company purchased Sunny...Ch. 11 - Montezuma Inc. purchases a delivery truck for...Ch. 11 - Garcia Co. owns equipment that costs $150,000,...Ch. 11 - Urquhart Global purchases a building to house its...Ch. 11 - You are an accounting student at your local...Ch. 11 - Speedy delivery service recently hired a new...Ch. 11 - Speedy Delivery has a very lazy accountant. When...Ch. 11 - Malone Industries has been in business for five...Ch. 11 - Your family started a new manufacturing business...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions add
What seven types of transactions involving notes receivable do businesses generally encounter?

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

REACHING A FINANCIAL GOAL Erika and Kitty, who are twins, just received 30,000 each for their 25th birthday. Th...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Discuss target market strategies

MKTG 12:STUDENT ED.-TEXT

What three steps are involved in delegation? Explain each.

Foundations of Business (MindTap Course List)