BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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As an expense in Profit And Loss Account
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As an intangible asset in Statement Of Financial Position
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As a current liability in Statement Of Financial Position
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As a long-term loan in Statement Of Financial Position
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Detailed explanation-1: -Goodwill is recorded as an intangible asset on the acquiring company’s balance sheet under the long-term assets account. Goodwill is considered an intangible (or non-current) asset because it is not a physical asset like buildings or equipment.
Detailed explanation-2: -Goodwill, brand recognition and intellectual property, such as patents, trademarks and copyrights, are all intangible assets. Intangible assets which have been acquired by a third party are recorded on the balance sheet at their purchase price.
Detailed explanation-3: -In accounting, goodwill is an intangible asset. The concept of goodwill comes into play when a company looking to acquire another company is willing to pay a price premium over the fair market value of the company’s net assets.
Detailed explanation-4: -Intangible assets only appear on the balance sheet if they have been acquired. If Company ABC purchases a patent from Company XYZ for an agreed-upon amount of $1 billion, then Company ABC would record a transaction for $1 billion in intangible assets that would appear under long-term assets.
Detailed explanation-5: -Goodwill is a miscellaneous category for intangible assets that are harder to parse individually or measured directly. Customer loyalty, brand reputation, and other non-quantifiable assets count as goodwill. Goodwill cannot exist independently of the business, nor can it be sold, purchased, or transferred separately.