When a Company Purchases Another Company That Has Existing Goodwill

Multiple Choice

When a company purchases another company that has existing goodwill and the transaction is accounted for as a stock acquisition, the goodwill should be treated in the following manner:

A) ​The goodwill on the books of an acquired company should be written off.
B) ​Goodwill is recorded prior to recording fixed assets.
C) ​The fair value of the goodwill is ignored in the calculation of goodwill of the new acquisition.
D) ​Goodwill is treated in a manner consistent with tangible assets.