When a company establishes an outstanding reputation and has a competitive advantage because of it, the company should record goodwill on its financial statements.

Question

Quizplus · Accepted Answer

Goodwill is only recorded in the financial statements when a company acquires another business for more than the fair value of its net identifiable assets. It is not recorded due to a company's internally generated reputation or competitive advantage.

When a Company Establishes an Outstanding Reputation and Has a Competitive