After March, 2004 international standards required that goodwill:
A) Be capitalized and amortized over 20 years or less.
B) Be capitalized and amortized over 40 years or less.
C) Be capitalized and reviewed annually and its value should be adjusted if impaired.
D) Be expensed immediately.

Question

Quizplus · Accepted Answer

After March, 2004, international standards required that goodwill should be capitalized and reviewed annually, and its value should be adjusted if impaired. Goodwill should not be amortized over a fixed period unless its useful life can be reliably estimated. Thus, option A and B are incorrect. Goodwill cannot be expensed immediately as it represents an amount paid over and above the fair value of identifiable net assets acquired, and hence it is an intangible asset that should be recognized in the balance sheet. Hence, option D is incorrect.

After March, 2004 International Standards Required That Goodwill