- CFA Exams
- CFA Exam: Level I 2021
- 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 |
|---|---|
| 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 |