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G Corporation acquired a small software company. Included in the purchase of the software company is...

G Corporation acquired a small software company. Included in the purchase of the software company is $90,000 of goodwill. The software company was purchased in October. Compute the amortization deduction for the first year only if the amortization period begins in October in the year the software company was acquired.

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Answer #1

G corporation purchase software company and paid more than of its fair value, that's why Goodwill aises .

This goodwill is called purchased goodwill . Purchased goodwill refers to, when one business buy another business and purchase consideration paid is more than the value of net tangible assets received.

According to generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS) goodwill is never amortized. Because it is considered to have an indefinite usefull life.

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