625 B
625 B
Goodwill appears on the purchasing company's balance sheet when they acquire another company and pay more than what the assets are worth on paper. That premium — paid for things like reputation, loyal customers, good location — is recorded as goodwill.
Why the others are wrong:
- A) Brand and trademarks are intangible assets, not goodwill specifically
- C) Goodwill is just one component of intangible assets, not all of them
- D) Future earnings aren't recorded on the balance sheet at all
A simple way to remember it: Goodwill = what you overpaid, and why (reputation, customer loyalty, etc.)