Goodwill Quiz

What is Goodwill?

• Tangible assets owned by the company

• The difference between the purchase price and the fair value of identifiable net assets acquired

• Income from product sales

If there is an impairment of Goodwill, what is the correct journal entry?

• Db. Goodwill, Cr. Retained Earnings

• Db. Goodwill Impairment Loss, Cr. Goodwill

• Db. Cash, Cr. Goodwill

• Db. Retained Earnings, Cr. Goodwill

What is the purpose of an impairment test on Goodwill?

• To increase the value of Goodwill

• Ensure that Goodwill does not exceed its recoverable value

• Determine the depreciation expense of Goodwill

• Record the growth of Goodwill

What journal entry should be made if there is an impairment of Goodwill of Rp150,000,000?

• Db. Goodwill Rp150,000,000, Cr. Retained Earnings Rp150,000,000

• Db. Goodwill Impairment Loss Rp150,000,000, Cr. Goodwill Rp150,000,000

• Db. Cash Rp150,000,000, Cr. Goodwill Rp150,000,000

• Db. Goodwill Rp150,000,000, Cr. Goodwill Impairment Loss Rp150,000,000

What is the correct journal entry when a company acquires another company and pays more than the fair value of identifiable net assets?

• Debit Cash, Credit Goodwill

• Debit Goodwill, Credit Assets

• Debit Goodwill, Credit Cash

• Debit Fixed Assets, Credit Goodwill

Goodwill is the residual, means...

• The excess of cost over par value of the identifiable net assets acquired.

• The excess of cost over fair value of the identifiable net assets acquired.

• The excess of identifiable net assets over the cost of goodwill

Answer explanation

How is goodwill presented in financial statements?

• As part of the company’s liabilities

• As part of the company’s equity

• As a separate line item under intangible assets on the balance sheet