What is the correct statement about goodwill in relation to amortization?

What is the correct statement about goodwill in relation to amortization?

• A. Goodwill stays the same and is not amortized; changes only with impairment.
• B. Goodwill is amortized over 10 years.
• C. Goodwill is depreciated.
• D. Goodwill is a fixed asset.

Answer: (B)

Goodwill is not amortized. Under current standards, goodwill (an intangible asset from a business combination) is tested for impairment rather than being written off over a set period. If the carrying amount exceeds its recoverable amount, an impairment loss is recorded, reducing the asset value and earnings. It’s not depreciated, and it’s not a fixed asset. The idea of amortizing goodwill over a fixed period (like 10 years) isn’t how goodwill is treated today.

Goodwill is not amortized. Under current standards, goodwill (an intangible asset from a business combination) is tested for impairment rather than being written off over a set period. If the carrying amount exceeds its recoverable amount, an impairment loss is recorded, reducing the asset value and earnings. It’s not depreciated, and it’s not a fixed asset. The idea of amortizing goodwill over a fixed period (like 10 years) isn’t how goodwill is treated today.