Goodwill can never be charged directly to stockholders' equity.

Question

Quizplus · Accepted Answer

Goodwill is an intangible asset that represents the excess of the purchase price of a business over the fair value of its identifiable net assets. It is recorded on the balance sheet as an asset and is amortized over a period not to exceed 10 years. Goodwill cannot be charged directly to stockholders' equity because it is not a distribution of earnings or a reduction of capital.

Goodwill Can Never Be Charged Directly to Stockholders' Equity