Following an acquisition, the acquiring firm's balance sheet shows an asset labeled "goodwill." What form of merger accounting is being used?

Question

Quizplus · Accepted Answer

Goodwill is only recorded in the purchase method of accounting for mergers and acquisitions. The other options (consolidation, aggregation, pooling) do not require the recording of goodwill as a separate asset on the balance sheet.

Following an Acquisition, the Acquiring Firm's Balance Sheet Shows an Asset