Goodwill is:
A) Amortized over the greater of its estimated life or 40 years.
B) Only recorded by the seller of a business.
C) The excess of the fair value of a business over the fair value of all net identifiable assets.
D) None of these answer choices are correct.

Question

Quizplus · Accepted Answer

Goodwill represents the excess of the fair value of a business over the fair value of all net identifiable assets. It is recorded when a company acquires another business, and it represents intangible assets such as customer relationships, brand recognition, and intellectual property. Goodwill is tested for impairment annually and is not amortized but tested for impairment. Option A is incorrect since goodwill is not amortized. Option B is incorrect as it is recorded by the buyer of a business too. Option D is incorrect as option C is the correct answer.

Goodwill Is