An argument in favor of capitalizing purchased goodwill is that the cost of the purchased goodwill is supported by which theoretical characteristic?
A)relevance
B)reliability
C)decision usefulness
D)understandability

Question

Quizplus · Accepted Answer

Capitalizing purchased goodwill is supported by the reliability characteristic, as it involves using objective and verifiable information (i.e. the cost of the purchase) to record the asset on the balance sheet. Relevance and decision usefulness are also important characteristics, but do not specifically support capitalizing purchased goodwill. Understandability is not relevant to this question.

An Argument in Favor of Capitalizing Purchased Goodwill Is That