A CRMLA applicant shows net worth of $310,000, of which $95,000 is goodwill recorded from acquiring a competitor in 2024. What is its tangible net worth after excluding goodwill, and does it meet the statutory minimum?
Correct Answer
B) Tangible net worth is $215,000, which is below the $250,000 required
The requirement is tangible net worth computed under generally accepted accounting principles, so goodwill comes out and $310,000 less $95,000 leaves $215,000, under the $250,000 floor. Other choices: goodwill is an asset but not a tangible one; being positive is not the test, the figure is; and the commissioner sets higher requirements in particular cases rather than the basic computation. Source: Cal. Fin. Code § 50201
Why This Is the Correct Answer
The requirement is tangible net worth computed under generally accepted accounting principles, so goodwill comes out and $310,000 less $95,000 leaves $215,000, under the $250,000 floor. Other choices: goodwill is an asset but not a tangible one; being positive is not the test, the figure is; and the commissioner sets higher requirements in particular cases rather than the basic computation. Source: Cal. Fin. Code § 50201
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