Which Statement Regarding Goodwill Is True

question 33

Multiple Choice

Which statement regarding goodwill is true?

• A)Goodwill is an unidentifiable intangible asset.
• B)Internally developed goodwill should be capitalized while purchased goodwill should be expensed.
• C)Goodwill can be defined as the value attached to the ability of a company to earn a higher than normal rate of return on the book value of its identifiable assets.
• D)In some situations, GAAP requires that negative goodwill be recorded.

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Definitions:

Seize Property

The act of taking possession of property, often by legal authority, due to the failure to comply with a court order or owing to a breach of law.

Guarantor

A person or entity that agrees to be responsible for another's debt or performance under a contract if the original party fails to meet their obligations.

Creditor/Debtor Transaction

A financial relationship where one party (creditor) provides goods, services, or money to another party (debtor) under the agreement that the debtor will repay the creditor at a later date.

Security

Measures or instruments to ensure the enforcement of obligations or the protection of financial assets.