An inconsistency in accounting theory can occur because
A) internally developed goodwill is expensed, while purchased goodwill is capitalized.
B) internally developed goodwill is capitalized, while purchased goodwill is expensed.
C) internally developed goodwill is amortized, while purchased goodwill is maintained but tested for impairment.
D) purchased goodwill is amortized, while internally developed goodwill is maintained but tested for impairment.

Question

Quizplus · Accepted Answer

Internally developed goodwill is not capitalized but expensed as incurred, while purchased goodwill is capitalized and not amortized but tested for impairment. This creates an inconsistency in how goodwill is treated based on its origin.

An Inconsistency in Accounting Theory Can Occur Because