What does goodwill mean on the CPA exam?
Goodwill. An asset representing the future economic benefits of acquired assets not separately identified, measured as consideration less identifiable net assets. Public entities do not amortize it and test at the reporting unit level; electing private companies and NFPs amortize over 10 years and may test at the entity level.
Defined against ASC 350-20-20; 805-30-30-1.
Which CPA exam sections use goodwill?
Goodwill appears in the FAR section of the CPA exam.
Other terms defined against ASC 350-20
- reporting unit: An operating segment or one level below it, and the level at which goodwill is tested for impairment.
Related terms
- liabilities assumed: Obligations the acquirer takes on as part of a combination.
- business combination: A transaction in which one entity obtains control of a business.
- net assets: Assets less liabilities.
- asset acquisition: Buying a group of assets that does not amount to a business.
- temporary difference: A difference between the tax basis of an asset or liability and its reported amount that will produce taxable or deductible amounts in future years.
- cash equivalents: Short-term, highly liquid investments readily convertible to known amounts of cash and so near maturity that interest rate changes pose insignificant risk.