FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:Yeast Corporation purchased Bitter Ltd. on August 31, 2020. Yeast Corporation
recorded goodwill in the purchase of Bitter. Yeast has determined that the Bitter
goodwill will have an indefinite life. How will Yeast account for the Bitter goodwill in
future accounting periods?
Yeast will amortize the Bitter goodwill over a 50-year life.
If the value of the Bitter goodwill increases in subsequent years, Yeast will
increase the value in the Bitter Goodwill account.
Yeast is not allowed to change the value of the Bitter Goodwill account
regardless of any future increase or decrease in the value of Bitter Goodwill.
If the value of the Bitter goodwill decreases in subsequent years, Yeast will
decrease the value in the Bitter Goodwill account.
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