Which statement regarding goodwill is true?
A)Goodwill is an unidentifiable intangible asset.
B)Internally developed goodwill should be capitalized while purchased goodwill should be expensed.
C)Goodwill can be defined as the value attached to the ability of a company to earn a higher than normal rate of return on the book value of its identifiable assets.
D)In some situations, GAAP requires that negative goodwill be recorded.

Question

Quizplus · Accepted Answer

Goodwill is considered an unidentifiable intangible asset, meaning it cannot be specifically attributed to a certain identifiable asset or liability. It represents the excess of the amount paid to acquire a company over the value of its identifiable assets and liabilities. Therefore, it cannot be separated from the overall value of the company.

Which Statement Regarding Goodwill Is True