Which of the following is TRUE of goodwill?

Question

Quizplus · Accepted Answer

Goodwill is not amortized. Instead, it is subject to an annual impairment test to determine if the carrying value of the goodwill on the company's balance sheet exceeds its fair value. If it does, then an impairment loss is recognized. If not, then no adjustments are made. Option A is incorrect because acquired goodwill is no longer amortized, as it was prior to accounting rule changes in 2001. Option B is also incorrect because internally generated goodwill is not recognized as an asset under generally accepted accounting principles. Finally, option C is incorrect because goodwill is not expensed - it is recorded as an asset.

Which of the Following Is TRUE of Goodwill