Goodwill Can Be Recorded

question 226

Multiple Choice

Goodwill can be recorded

• A) when customers keep returning because they are satisfied with the company's products.
• B) when the company acquires a good location for its business.
• C) when the company has exceptional management.
• D) only when there is an exchange transaction involving the purchase of an entire business.

---

Definitions:

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the loss in value as it ages, used for accounting and tax purposes.

Cash Coverage Ratio

A financial metric that measures a company's ability to pay off its debt obligations with its operating cash flow. It is an important indicator of financial health.

Debt-Equity Ratio

A marker indicating the relative financing tactics of using debt and equity in company assets.

Return On Assets

A financial ratio indicating the profitability of a firm relative to its total assets, demonstrating how efficient a company is at using its assets to generate earnings.