When a Company Purchases Another Company That Has Existing Goodwill

question 19

Multiple Choice

When a company purchases another company that has existing goodwill and the transaction is accounted for as a stock acquisition, the goodwill should be treated in the following manner.

• A) Goodwill on the books of an acquired company should be disregarded.
• B) Goodwill is recorded prior to recording fixed assets.
• C) Goodwill is not recorded until all assets are stated at full fair value.
• D) Goodwill is treated consistent with other tangible assets.