Asked by Gisselle Leyva on Jun 15, 2024
Verified
When a company establishes an outstanding reputation and has a competitive advantage because of it, the company should record goodwill on its financial statements.
Goodwill
An intangible asset that is created from such favorable factors as location, product quality, reputation, and managerial skill.
- Understand the concept of goodwill and how it is treated in financial statements.
Verified Answer
JB
Jacob BilgerJun 20, 2024
Final Answer :
False
Explanation :
Goodwill is only recorded in the financial statements when a company acquires another business for more than the fair value of its net identifiable assets. It is not recorded due to a company's internally generated reputation or competitive advantage.
Learning Objectives
- Understand the concept of goodwill and how it is treated in financial statements.