Question

The costs associated with purchased goodwill are capitalized and amortized over a period not to exceed...

The costs associated with purchased goodwill are capitalized and amortized over a period not to exceed 20 years.

True or False?

Homework Answers

Answer #1

Solution:

Goodwill is no longer permitted to be amortized if purchased. In accounting goodwill is accrued when pays more for an assets from its fair value. Corporations use the purchase method of accounting, which do not allow impairement of goodwill. Goodwill is carried in balance sheet and tested for impairment at least once a year.

Hence costs associated with purchased goodwill are capitalized and amortized over a period not to exceed 20 years. This statement is false.

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