Goodwill:
A)should be treated like most other intangible assets and amortized over a useful life of not more than 40 years.
B)is an accounting measurement of how well a company's employees behave towards the company's customers.
C)should be recorded as a negative value if a company is purchased for less than the net carrying value of its assets.
D)is recorded when the purchasers of a business pay more than the fair market value of the assets purchased.

Question

Quizplus · Accepted Answer

Goodwill is recorded when the purchasers of a business pay more than the fair market value of the assets purchased. It represents the value of the company's reputation, customer relationships, brand recognition, and other intangible assets not separately identified in the acquisition. Goodwill is not amortized, but instead tested for impairment annually or when events or circumstances indicate that the carrying value of the goodwill may not be recoverable.