Goodwill
(Intangible Asset).
Formula
Goodwill = Purchase Price − Net Asset Value
Real World
When Facebook acquired Instagram for $1 billion in 2012, Instagram's net assets were worth a fraction of that; the remainder was goodwill — the value of Instagram's brand and user base.
Exam Focus
Always state that goodwill is an intangible asset and must be tested annually for impairment — a common mark-scheme requirement.
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