When a business is purchased from a sole trader, the excess of the purchase price over the net assets is

  • A reserve
  • B goodwill
  • C feehold
  • D valuation price

The correct answer is B. goodwill

Goodwill is recorded when a company acquires (purchases) another company and the purchase price is greater than the fair value of the identifiable tangible and intangible assets therein.

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