In the purchase of a business, a buyer has paid more than the value of the net assets of the business. The excess payment is referred to as?

A. Bonus
B. Goodwill
C. Net profit
D. Premium

Correct Answer: Option B

B. Goodwill

Explanation

When buying or selling a business, goodwill represents the value of the business that is above and beyond the worth of separately identifiable tangible business assets. Unlike physical assets, like buildings or equipment, goodwill is an intangible asset.