Capital reserve
Reserve capital
Security premium
Goodwill
Answer is Right!
Answer is Wrong!
The correct answer is: Goodwill.
Goodwill is an intangible asset that arises when a company acquires another company for more than the fair value of its net assets. It is often described as the “goodwill” that the acquiring company believes exists in the acquired company’s business, such as its customer base, brand name, or management team.
Goodwill is recorded on the balance sheet as an intangible asset and is amortized over a period of not more than 40 years.
The other options are incorrect for the following reasons:
- Capital reserve is a reserve that is created when a company issues new shares at a price above their par value. It is not related to the excess of net assets over consideration paid.
- Reserve capital is a reserve that is created when a company retains some of its profits. It is not related to the excess of net assets over consideration paid.
- Security premium is the amount that a company receives above the par value of its shares when it issues new shares. It is not related to the excess of net assets over consideration paid.