Goodwill can only be recognized when a company is acquired by another company.

Question

Quizplus · Accepted Answer

Goodwill is recognized in accounting when one company acquires another company for a price higher than the fair value of its net identifiable assets at the acquisition date. It represents the intangible value of the acquired company, such as brand reputation, customer relationships, and intellectual property, which are not separately identifiable or separately recognized.

Goodwill Can Only Be Recognized When a Company Is Acquired