- CFA Exams
- 2021 CFA Level I Exam
- Study Session 7. Financial Reporting and Analysis (2)
- Reading 22. Understanding Balance Sheets
- Subject 2. Measurement Bases of Assets and Liabilities
CFA Practice Question
________ measures the premium paid over market value to acquire an asset.
B. Goodwill
C. Patents
A. Reputed value
B. Goodwill
C. Patents
Correct Answer: B
The premium paid in excess of market value is for the goodwill that a company has created in its line of business.
User Contributed Comments 1
User | Comment |
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wundac | Goodwill: Intangible asset representing the difference between the purchase price of an asset and its fair market value. Ex: Goodwill is created when a bank pays a premium to acquire the assets of another bank in a take-over transaction |