Home/ Questions/An asset is classified as goodwill on the balance sheet when a company purchases an asset at greater than fair-market value.
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Asked: 2022-04-13T08:55:19+00:00 In:

An asset is classified as goodwill on the balance sheet when a company purchases an asset at greater than fair-market value.

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QUESTION 10 / 11 

An asset is classified as goodwill on the balance sheet when a company purchases an asset at greater than fair-market value. 

According to GAAP, you can adjust goodwill when ______________

SELECT ONLY ONE 

A, an asset is sold 

B, stock prices go down 

C, a new asset is purchased 

D, stock prices go up 

E, goodwill is impaired

♦ Relevant knowledge
Current assets are assets that are in short-term use that are used up over the space that is one calendar year. They can be further classified into the cash-equivalents. The current assets are employed to determine various ratios of liquidity like the quick ratio and current ratio.

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  1. Best Answer
    GAAP allows you to adjust goodwill for goodwill is impaired.
    Annual amortization is not applicable to Goodwill. Goodwill is periodically tested for impairment and any decrease in Goodwill’s value is considered Impairment loss.
    Option E goodwill is impaired is correct
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