Goodwill can be recorded as an asset when a(n)
A)business has above normal profitability compared to other businesses in its industry.
B)business can determine that it has created customer goodwill and name recognition.
C)offer is received to purchase the business at a price in excess of the value of the assets.
D)business is purchased and payment is made in excess of the value of the net assets.

Question

Quizplus · Accepted Answer

Goodwill can be recorded as an asset only when a business is purchased and payment is made in excess of the value of the net assets. This excess payment is considered as the cost of acquiring the goodwill of the business. The other options mentioned in the question may contribute to the creation of goodwill, but do not necessarily meet the criteria for recording goodwill as an asset on the balance sheet.

Goodwill Can Be Recorded as an Asset When A(n)