Goodwill:
A)should be treated like most other intangible assets and amortized over a useful life of not more than 40 years.
B)is an accounting measurement of how well a company's employees behave towards the company's customers.
C)should be recorded as a negative value if a company is purchased for less than the net carrying value of its assets.
D)is recorded when the purchasers of a business pay more than the fair value of the assets purchased.

Question

Quizplus · Accepted Answer

Goodwill is the premium a company pays to obtain the favorable features associated with another company.Although many companies have probably built up their own goodwill,GAAP do not allow it to be reported as an intangible asset on the balance sheet unless it has been purchased from another company.For most companies,goodwill is not amortized but instead is tested annually for impairment and written down if its value is found to be impaired.Private companies were allowed to forgo annual impairment testing and instead amortize goodwill using the straight-line method over 10 years or less.