How Is Goodwill Accounted for Subsequent to Acquisition

question 82

Multiple Choice

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.

---

Definitions:

Perpetual Inventory System

A method of inventory management where adjustments to inventory accounts are made continuously as transactions occur.

Cost Of Goods Sold

An accounting term referring to the direct costs attributable to the production of the goods sold by a company.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, becoming the next period's beginning inventory.

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made at specific intervals, such as monthly or annually, rather than continuously.