Question

__________ may be described as the aggregate of those intangible attributes of a business which contribute to its superior earning capacity over a normal return on investment.

• A. Image of firm
• B. Goodwill
• C. Work quality
• D. None of the above

Answer 1

Answer: (B)

Goodwill

Goodwill in accounting is an intangible asset that arises when a buyer acquires an existing business. Goodwill represents assets that are not separately identifiable.

Goodwill arises when a company acquires another entire business. The amount of goodwill is the cost to purchase the business minus the fair market value of the tangible assets, the intangible assets that can be identified, and the liabilities obtained in the purchase.