Purchased goodwill should be
A) expensed as soon as possible against retained earnings.
B) expensed as soon as possible to other comprehensive income.
C) amortized over the period benefited, but not more than 40 years.
D) not expensed or amortized, but rather reduced only if impairment occurs.

Question

Quizplus · Accepted Answer

Purchased goodwill is not amortized but rather tested for impairment annually. If impairment occurs, the amount of impairment is recognized as an expense on the income statement. Therefore, the correct option is D.

Purchased Goodwill Should Be