Which of the following statements about the capitalisation of goodwill is true?
A) Neither internally generated nor purchased goodwill may be capitalised.
B) Both internally generated and purchased goodwill may be capitalised.
C) Internally generated goodwill is never capitalised,but purchased goodwill is capitalised.
D) Internally generated goodwill may be capitalised,but purchased goodwill is never capitalised.

Question

Quizplus · Accepted Answer

Internally generated goodwill is not recognized as an asset and cannot be capitalized because it is not an identifiable resource controlled by the entity that can be measured reliably at cost. However, purchased goodwill, which arises from a business combination, is recognized as an asset and is capitalized on the balance sheet. This is because it can be measured reliably at the cost of acquisition.

Which of the Following Statements About the Capitalisation of Goodwill