Goodwill Accounting

Prev Question Next Question

Question

Goodwill should:

Answers

A. be expensed in the period in which it is purchased from another company or organization.

B. not be amortized as it will be a benefit to the company over its entire life. Companies are assumed to have an indefinite life.

C. written off over a 40 year period even if the superior earning power justifying its existence disappears.

D. be amortized to income over a period not exceeding 40 years.

Show Answer

Explanations

Click on the arrows to vote for the correct answer

A. B. C. D.

Goodwill can be amortized over a maximum of 40 years. However, goodwill should be amortized over a number of periods equal to its ability to deliver superior earning power unless that period is over 40 years.

Prev Question Next Question