Goodwill

What is Goodwill?

• Tangible assets owned by the company

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

• Liabilities owned by the company

• Revenue from product sales

What is the purpose of impairment testing for Goodwill?

• To increase the value of Goodwill

• To ensure that Goodwill does not exceed its recoverable amount

• To determine the depreciation expense of Goodwill

• To record the growth of Goodwill

If there is a decline in Goodwill value, what is the correct journal entry?

• Debit Goodwill, Credit Retained Earnings

• Debit Impairment Expense, Credit Goodwill

• Debit Cash, Credit Goodwill

• Debit Retained Earnings, Credit Goodwill

What journal entry should be made if there is a decrease in Goodwill of Rp150,000,000?

• Debit Goodwill Rp150,000,000, Credit Retained Earnings Rp150,000,000

• Debit Impairment Expense Rp150,000,000, Credit Goodwill Rp150,000,000

• Debit Cash Rp150,000,000, Credit Goodwill Rp150,000,000

• Debit Goodwill Rp150,000,000, Credit Impairment Expense Rp150,000,000

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

• Debit Cash, Credit Goodwill

• Debit Goodwill, Credit Asset

• 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 required

• the excess of cost over fair value of the identifiable net assets required

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

• the excess of identifiable net assets required over the cost over the cost of impairment

How is goodwill presented in financial statements?

• As part of the company's liabilities

• As part of the company's equity

• As a line item under current assets

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

What is the impact of goodwill on a company's financial statements?

• No impact on the financial statements

• Reduces the carrying amount of goodwill and recognizes impairment losses in the income statement

• Increases net income and reduces the carrying amount of goodwill

• Increases equity value

If PT GHI acquires another business for $12,000 and the fair value of the identified net assets is $10,000, what is the amount of goodwill recognized?

• $2,000

• $8,000

• $12,000

• $22,000

How is goodwill recognized in financial statements?

• When a company issues new shares and pays more than the fair value of the identified net assets

• When a company sells its products at a profit

• When a company generates internally

• When a company acquires another business and pays more than the fair value of the identified net assets