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Quick Question on net assets

Accounting
Tutor: None Selected Time limit: 0 Hours


If one company purchases the net assets of another company (not an acquisition)....How do we put the premium in the balance sheet? Should we use goodwill? Do you know
Nov 22nd, 2014

Goodwill is created when one company acquires another for a price higher than the fair market value of its assets; for example, if Company A buys Company B for more than the fair value of Company B's assets and debts, the amount left over is listed on Company A's balance sheet as goodwill.

If the asset is purchased to resale then it should be entered under Stocks.

Hope this helps :)

Nov 22nd, 2014

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