Two national companies both sell a variety of soaps and lotions. When looking at the balance sheets, one company lists goodwill as an asset, but the other company does not. What does this tell you about these companies

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27-07-2021
Business

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Two national companies both sell a variety of soaps and lotions. When looking at the balance sheets, one company lists goodwill as an asset, but the other company does not. What does this tell you about these companies

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Parrain Parrain · Answer 1 · 2021-07-29T02:48:44+02:00

Answer: A. The first company purchased an entire business to expand the company, whereas the second company likely has not yet purchased another entire business.

Explanation:

Goodwill is the value over a company's net value that it is purchased for. For instance, if a company is worth $15,000 but was purchased for $20,000, $5,000 is the goodwill.

A company only expresses goodwill in its books when it has purchased another company for more than the company's value and when the balance sheets of the purchaser and the purchased were consolidated, the goodwill is therefore shown.

If the first company has goodwill as an asset then it means that it has purchased a company before unlike the second company which has not purchased any company as of yet.

swatiupadhyay714 swatiupadhyay714 · Answer 2 · 2021-11-18T06:37:49+01:00

Goodwill is referred to as intangible assets and is associated with the reputation of the firm. The goodwill depends on the gradual growth of the company at the variable stages. It is the purchase or acquisition of the assets at fair value and acquiring limited liabilities for the better growth of the company.

The correct option for the answer is A. The first company purchased an entire business to expand the company, whereas the second company likely has not yet purchased another entire business.

Options A. The first company purchased an entire business to expand the company, whereas the second company likely has not yet purchased another entire business is correct because the first company has made the decision to expand by owning it and getting some of the major investors from the market for the investment as well.

Options:

B. The first company regularly donates to charitable causes, whereas the second company does not donate to charitable causes.

C. The first company purchased patents above market value to expand their product line, whereas the second company likely developed all of their patents in-house.

D. The first company added research and development costs as an intangible asset, whereas the second company expensed their research and development costs immediately

These options are wrong because they do not specify the correct meaning of the sentence in the context. They are verifying the other concept as compared to the context.

To know more about the Goodwill of the company, refer to the link below:

https://brainly.com/question/5006029