Does GAAP
require amortization of goodwill against net income? If not, when does goodwill
decrease? A.Maybe, under IFRS goodwill is written off or reduced to a lesser
value only when its value is impaired. Under US GAAP, goodwill is amortized.
B.Yes, goodwill is always amortized against net income over the estimated
useful life of the goodwill. C.No, under both the U.S. GAAP and IFRS goodwill
is written off or reduced to a lesser value only when its value is impaired.
D.Maybe, if goodwill is purchased, it should be amortized over the estimated
useful life of the goodwill, if goodwill is created then it should not be
amortized.
ANSWER
As per GAAP, self generated intangible assets
cannot be recognised whereas acquired intangible assets can be recognised and
amortized over its useful life.
Hence we can say that self generated goodwill
cannot be amortized and acquired godwill can be amortized.
Correct Option is
D) May be,
if goodwill is ourchased, it should be amortized over the estimated useful life
of the goodwill, if good will is ccreated then it should not be amortized.
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