Goodwill:
A) that is created internally is recorded on the company's books as an intangible asset.
B) does not need to be tested for impairment.
C) is amortized over a period of ten years.
D) is recorded when it is purchased in the acquisition of another company.

Question

Quizplus · Accepted Answer

Goodwill is recorded on a company's books only when it is purchased in the acquisition of another company. It represents the amount paid for the acquired company over and above its book value, and it is considered an intangible asset. Goodwill is not amortized over a period of time; instead, it is subject to an annual impairment test to ensure that its carrying value is not higher than its fair value.