Internally generated goodwill is not recorded by accountants because:
A) it cannot be measured reliably.
B) it is not important.
C) it does not belong to the partners.
D) it is immaterial.

Question

Quizplus · Accepted Answer

Internally generated goodwill is not recorded by accountants because it cannot be measured reliably. Goodwill generated through external means such as acquiring another company can be recorded on the balance sheet because there is a measurable amount paid for it. However, internally generated goodwill is based on factors such as reputation, customer loyalty, and employee morale, which cannot be reliably measured or objectively valued.

Internally Generated Goodwill Is Not Recorded by Accountants Because