In accounting,which of the following is true of goodwill?
A)It may be recorded whenever a company achieves a level of profit that exceeds the industry average.
B)It does not need to be amortized because its useful life is indeterminate.
C)It may be recorded when a company purchases another business.
D)It must be expended in the period it is recorded because benefits from goodwill are difficult to identify.

Question

Quizplus · Accepted Answer

Goodwill can be recorded when a company purchases another business. It represents the excess purchase price paid by the acquirer over the fair value of the identifiable net assets of the acquired company. Goodwill should be amortized over its useful life which is determined through annual impairment testing.

In Accounting,which of the Following Is True of Goodwill