The existence of goodwill on a corporate balance sheet indicates that the corporation has:
A) been profitable in the past.
B) depreciated its tangible assets.
C) intangible assets from past acquisitions.
D) retained earnings resulting from past income.

Question

Quizplus · Accepted Answer

Goodwill is an intangible asset that represents the excess of the purchase price over the fair value of the net assets acquired in a business combination. Therefore, the existence of goodwill on a corporate balance sheet indicates that the corporation has acquired intangible assets from past acquisitions. Goodwill does not directly represent past profitability, depreciation of tangible assets, or retained earnings resulting from past income.

The Existence of Goodwill on a Corporate Balance Sheet Indicates