Question

1.Describe the 3 methods to account for debt securities, and then describe how that can be confusing to a reader of financial statements that does not understand the difference on how the debt securities may be recorded. Answer needs to be sufficiently long to include all details, and should be in your own words.

2.When is it appropriate to record goodwill, and under what conditions? When is goodwill considered impaired and what does that mean? Answer needs to be sufficiently long to include all details, and should be in your own words.

Answer 1

Answer 1.) In accounting, goodwill is an intangible asset associated with a business combination.

Goodwill is reported on the balance sheet as a noncurrent asset. Goodwill could refer to some value that has been developed within a company as a result of delivering amazing customer service, unique management, teamwork, etc.

Goodwill is recorded in accounts only when entire businesses or segments are bought. It is not amortized; instead it is tested annually for impairment and written off when it is impaired, which occurs when an entire business is purchased, and the book value is greater than the fair value. In this situation only, current value is adjusted.