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Title: Accounting For Goodwill
Words: 1973
Reporting Goodwill on Financial Statements
The Current Reporting Style for Goodwill (amortization)
The reporting guidelines for goodwill are in APB (Accounting Principles Board) Opinions 16 and 17. Opinions 16 and 17 state the following basic guidelines to amortize goodwill:
¨ Amortize over its useful life not to exceed forty years.
¨ Charge the amortization of goodwill to operating expenses.
¨ Amortize goodwill using the straight-line method unless there is a more appropriate method.
¨ If the amortization is material, a disclosure of the charge is necessary, as well as the method and period of amortization (Kieso, pp. 611).
The reporting style of amortization of goodwill is appropriate for several reasons. First of all amortization is a good w ...
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