Question

A company has the following expenditures during the year: advertising $ 150,000 employee training 120,000 customer outreach and consultation 75,000 the company believes that these efforts have increased the fair value of the entire company by $487,500. how much goodwill can the company recognize at the end of the year associated with these expenditures? multiple choice

O $120,000
O $487,500
O $0
O $345,000

Answer 1

The company cannot recognize any goodwill from operational expenses like advertising, employee training, and customer outreach, so the recognized goodwill would be $0. Therefore correct option is C

Step-by-step explanation:

The question pertains to the recognition of goodwill on a company's balance sheet as a result of certain expenditures. In accounting, goodwill is recognized in a business combination when a company acquires another business and pays a premium over the fair value of the identifiable net assets. However, the costs mentioned in the question, such as advertising, employee training, and customer outreach, are generally considered operational expenses and do not contribute to the generation of goodwill that can be recognized on the balance sheet.

The correct answer to the question is that the company cannot recognize any goodwill associated with these expenditures, so the amount is $0.