Short Corporation recorded $4,000,000 of Goodwill when it acquired the publicly-held stock of Hathaway, Inc. Short...
Short Corporation recorded $4,000,000 of Goodwill when it acquired the publicly-held stock of Hathaway, Inc. Short will amortize any goodwill over the maximum number of years allowed. What is the annual amortization of goodwill for this acquisition under U.S. GAAP?
a. $100,000.
b. $400,000.
c. $200,000.
d. $0.
Homework Answers
Answer: b. $ 400,000.
If Short Corporation is not a publicly traded company, under U.S.GAAP, it would be allowed to be amortized straight line over a maximum period of 10 years. Therefore, annual amortization of goodwill will be $ 4,000,000 / 10 = $ 400,000.
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