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What is goodwill created in an acquisition?

  1. A The excess of purchase price over the fair value of identifiable net assets acquired
  2. B The target's brand value only
  3. C The cash paid
  4. D The debt assumed
Answer

The excess of purchase price over the fair value of identifiable net assets acquired

Under IFRS and Ind AS goodwill is not amortised but tested annually for impairment, which affects post-deal earnings if the acquisition disappoints.

All Investment Banking MCQs

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