Question

An example of an intangible asset is:

• A. Goodwill
• B. Debit balance of Profit and Loss Account
• C. Preliminary expenses
• D. Deferred revenue expenditure

Answer 1

The correct option is A Goodwill

Goodwill is an intangible asset that arises when one company purchases another for a premium value. Any excess of the amount of purchase consideration over the value of net assets of the transferor company acquired by the transferee company should be recognised as goodwill in the financial statements of transferee company.

Goodwill is considered as intangible asset because it is not a physical asset like building or equipment.