Asked by SamanthaRey Colón on Jul 03, 2024
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How is goodwill accounted for subsequent to acquisition?
A) It should be written off as soon as possible against retained earnings.
B) It should not be amortized because it has an indefinite life.
C) It should be written off as soon as possible as an expense.
D) It is amortized over its estimated useful life.
Goodwill
An intangible asset that arises when one company acquires another for a premium value, representing the excess of the purchase price over the fair market value of the identifiable assets and liabilities.
Indefinite Life
An intangible asset's useful life that is not limited to a predetermined period and could extend indefinitely.
Amortized
The process of spreading out a loan or intangible asset into a series of fixed payments over time, reducing the value of the asset or paying off the debt.
- Learn to ascertain and calculate the value of goodwill in business takeover scenarios.
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Learning Objectives
- Learn to ascertain and calculate the value of goodwill in business takeover scenarios.
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