On January 1,2012,Stacy Company purchased the College Book Store for $350,000.At the date of purchase,it was determined the recorded assets had a total market value of $325,000,comprised of inventory (books),$275,000; fixtures,$30,000; and other assets $20,000.It is estimated that the goodwill (if any)has an economic useful life of 20 years.What is the amount of amortization expense for goodwill for 2012?
A)$1,250
B)$0
C)$16,250
D)$17,500

Question

Quizplus · Accepted Answer

Since the market value of the assets acquired is less than the purchase price, the excess of $25,000 is recorded as goodwill. However, the question states that it is estimated to have a useful economic life of 20 years, which indicates that it is not considered to be an indefinite-lived asset. Therefore, it should be amortized over its useful life. However, the question does not provide any information about the amortization method or the period-end date, making it impossible to calculate the amortization expense. Therefore, the correct choice is B ($0), indicating that there is insufficient information to calculate the amount of goodwill amortization for 2012.

On January 1,2012,Stacy Company Purchased the College Book Store for $350,000.At