Question

Goodwill:

is an intangible asset that is tested annually for impairment.
is an intangible asset that is always amortized.
appears as an expense on the income statement when a company buys an entire business unit.
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can appear on the balance sheet either as an asset or a liability.
is the difference between the purchase price of a business and the book value of the net assets.

Answer 1

is the difference between the purchase price of a business and the book value of the net assets.

Step-by-step explanation:

Goodwill comes about when an individual or a firm wants to acquire another business as a going concern. The acquiring entity usually pays more than the book value of the firm it is purchasing. The difference between the purchasing rate and the net worth of a firm is the goodwill.

Goodwill is an intangible asset. It covers benefits like a good reputation, existing customer base, ideal location, and trained staff that the acquiring entity will inherit from the previous owner.