Goodwill appears on the balance sheet as an intangible asset.

• A. False
• B. It is a current asset
• C. It is a liability
• D. True

Answer: (D)

Goodwill is an intangible asset created in an acquisition when the purchase price exceeds the fair value of identifiable net assets. It represents future benefits from items like brand strength and customer relationships that aren’t separately identifiable. On the balance sheet, goodwill is shown as a long-term asset, not a current asset and not a liability. It isn’t amortized; instead it’s tested for impairment at least annually, with any impairment reducing its carrying value. Because goodwill fits the definition of an intangible asset rather than a current asset or a liability, the statement is true.