Goodwill is an intangible asset that represents the excess amount paid over the fair value of net identifiable assets in an acquisition. Goodwill cannot be amortized over a fixed period of time, but it must be tested for impairment annually. Goodwill can be valued for negotiating purposes based on its future earnings potential and other factors that may affect its value.

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Goodwill Can Be

Question 92

Multiple Choice

Goodwill can be:

A) amortized over a 40-year period, regardless of useful life.
B) valued for negotiating purposes on the basis of future earnings potential.
C) amortized for income tax purposes by the double-declining method.
D) incremented annually on the balance sheet if a company earns above normal profit.

Correct Answer: