Which of the following statements regarding goodwill is false?
A) Goodwill is never amortized for financial reporting purposes.
B) A company must review its goodwill for impairment annually.
C) A company must review its goodwill for impairment whenever events or changes in circumstances occur that would more likely than not reduce the fair value below its carrying value.
D) A company records goodwill at the time that it acquires another company or at the time it determines that material intellectual capital exists in its employees.

Question

Quizplus · Accepted Answer

Goodwill is recorded on a company's balance sheet as a result of a business acquisition where the purchase price is higher than the sum of the fair value of the identifiable tangible and intangible assets acquired and the liabilities assumed. It is not recorded due to the recognition of intellectual capital in employees.

Which of the Following Statements Regarding Goodwill Is False