Which of the following is not true about goodwill?
A)Goodwill reflects the value of knowledgeable employees.
B)Goodwill reflects the value of a reputation for quality products.
C)Under U.S.GAAP, goodwill has an indefinite life, and firms do not amortize the amount recognized as goodwill.
D)Firms must test goodwill annually for a loss in value.
E)Under IFRS, goodwill has an indefinite life, and firms amortize the amount recognized as goodwill.

Question

Quizplus · Accepted Answer

Under IFRS, goodwill has an indefinite life, but firms still have to amortize the amount recognized as goodwill. This is different from U.S.GAAP, where firms do not amortize goodwill but have to test it annually for a loss in value. Therefore, statement E is false as it incorrectly states that under IFRS, firms do not amortize the amount recognized as goodwill.

Which of the Following Is Not True About Goodwill