Final answer:
The true statement regarding the special nature of goodwill is that it is recorded only when purchased in the acquisition of another company. Goodwill is not amortized over a fixed period anymore but is tested for impairment annually. Internally generated goodwill cannot be capitalized on a company's balance sheet.
Step-by-step explanation:
The special nature of goodwill as an intangible asset can be understood from the following true statement: Goodwill is recorded only when it is purchased in the acquisition of another company. Thus, option b) Goodwill is recorded only when it is purchased in the acquisition of another company, is the correct answer. The accounting standards do not allow companies to recognize the goodwill that they develop internally on their balance sheets. Instead, goodwill is recognized only when a business is bought, and the amount recorded is the excess of the purchase price over the fair value of the identifiable net assets.
As for amortization of goodwill, accounting standards like IFRS and the U.S. GAAP have now moved away from regular amortization of goodwill. Instead, it is required that goodwill is tested annually for impairment. If an impairment is found, then the value of goodwill is written down. Thus, options a) and c) which mention specific amortization periods, are outdated and not in line with current accounting practices.
Lastly, option d) Goodwill is recorded in the books of a company as the company creates it, is incorrect because internally generated goodwill is not capitalized on the balance sheet. This reflects the difficulty in reliably measuring the value of internally generated goodwill, and the need to provide users of financial statements with the most relevant and reliable information.