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. freehold
D. valuation price

Correct Answer: Option B

B. goodwill

Explanation

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.