Which of the following is/are true about Goodwill?
I. It represents the amount paid for an acquired firm that cannot be identified with tangible assets.
II. US GAAP prohibits capitalization of Goodwill.
III. IRS does not allow amortization of Goodwill for tax purposes.
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A. B. C. D.A
When the sum of the fair values of all identifiable assets and liabilities involved in the purchase of another entity is less than the amount paid, the excess is attributed to "intangibles." This excess is referred to as "Goodwill" and is capitalized as an asset. Under US GAAP, only Goodwill generated during acquisitions is capitalized; it does not allow capitalization of internally generated Goodwill