WGU D252 SKM1 Task 2: Goodwill Impairment
Comprehensive Assessment Exam Actual 2026/2027 –
Complete ASC 350 Questions with Detailed Rationales | 100%
Verified | Pass Guaranteed – A+ Graded
Section A: Goodwill Recognition & Initial Measurement (10 Questions)
Q1: On January 1, 2026, Apex Corporation acquired 100% of Beta Company for $850
million. The fair value of Beta's identifiable net assets was $620 million. What amount of
goodwill should Apex recognize on the acquisition date?
A. $0, because goodwill is not recognized until impairment testing is performed
B. $230 million [CORRECT]
C. $620 million, representing the fair value of identifiable net assets
D. $1,470 million, representing the total purchase consideration plus fair value of net
assets
Correct Answer: B
,Rationale: Under ASC 805 and ASC 350-20, goodwill is initially measured as the excess
of the purchase price over the fair value of identifiable net assets acquired ($850M −
$620M = $230M). Option A is incorrect because goodwill is recognized at acquisition; C
incorrectly identifies goodwill as net assets; D incorrectly adds rather than subtracts.
Q2: During a business combination, the acquirer identifies the following intangible
assets of the target: patents ($45M), trademarks ($30M), customer relationships
($25M), and in-process research and development ($15M). The purchase price was
$200M, and the fair value of all other identifiable net assets (excluding intangibles) was
$60M. What amount of goodwill should be recognized?
A. $25 million
B. $115 million
C. $85 million [CORRECT]
D. $0, because all intangibles are subsumed into goodwill
Correct Answer: C
Rationale: Goodwill = Purchase Price − Fair Value of Identifiable Net Assets. Total
identifiable net assets = $45M + $30M + $25M + $15M + $60M = $175M. Goodwill =
$200M − $175M = $85M. Option D is incorrect because identifiable intangibles meeting
the separability or contractual-legal criterion are recognized separately from goodwill
under ASC 805.
,Q3: Which of the following statements correctly describes goodwill under US GAAP?
A. Goodwill is amortized over its estimated useful life, not to exceed 40 years
B. Goodwill represents future economic benefits arising from assets that are individually
identified and separately recognized
C. Goodwill is an intangible asset representing the excess of purchase price over the fair
value of identifiable net assets acquired in a business combination [CORRECT]
D. Goodwill generated internally by a company is recognized at fair value on the balance
sheet
Correct Answer: C
Rationale: ASC 350-20-20 defines goodwill as the excess of the cost of an acquired
entity over the net of the amounts assigned to assets acquired and liabilities assumed.
Option A is incorrect because goodwill is not amortized (public companies); B
incorrectly states goodwill arises from individually identified assets; D is incorrect
because internally generated goodwill is never recognized under ASC 350.
Q4: In a business combination, which of the following would NOT be considered an
identifiable intangible asset separate from goodwill?
, A. A patent with a remaining legal life of 12 years
B. A customer list with demonstrable future economic benefits
C. The assembled workforce of the acquired company [CORRECT]
D. A trademark registered with the USPTO
Correct Answer: C
Rationale: Under ASC 805, an assembled workforce does not meet the separability or
contractual-legal criterion for recognition as an intangible asset separate from goodwill;
its value is subsumed into goodwill. Options A, B, and D all meet the criteria for separate
recognition as identifiable intangible assets.
Q5: On March 15, 2026, Meridian Corp acquired Delta Inc. for $500 million. The fair
value of Delta's identifiable assets was $380 million, and the fair value of liabilities
assumed was $90 million. Additionally, Meridian incurred $8 million in
acquisition-related legal fees and $3 million in due diligence costs. What amount of
goodwill should Meridian recognize?
A. $210 million
B. $219 million
C. $210 million, with $11 million expensed as incurred [CORRECT]
Comprehensive Assessment Exam Actual 2026/2027 –
Complete ASC 350 Questions with Detailed Rationales | 100%
Verified | Pass Guaranteed – A+ Graded
Section A: Goodwill Recognition & Initial Measurement (10 Questions)
Q1: On January 1, 2026, Apex Corporation acquired 100% of Beta Company for $850
million. The fair value of Beta's identifiable net assets was $620 million. What amount of
goodwill should Apex recognize on the acquisition date?
A. $0, because goodwill is not recognized until impairment testing is performed
B. $230 million [CORRECT]
C. $620 million, representing the fair value of identifiable net assets
D. $1,470 million, representing the total purchase consideration plus fair value of net
assets
Correct Answer: B
,Rationale: Under ASC 805 and ASC 350-20, goodwill is initially measured as the excess
of the purchase price over the fair value of identifiable net assets acquired ($850M −
$620M = $230M). Option A is incorrect because goodwill is recognized at acquisition; C
incorrectly identifies goodwill as net assets; D incorrectly adds rather than subtracts.
Q2: During a business combination, the acquirer identifies the following intangible
assets of the target: patents ($45M), trademarks ($30M), customer relationships
($25M), and in-process research and development ($15M). The purchase price was
$200M, and the fair value of all other identifiable net assets (excluding intangibles) was
$60M. What amount of goodwill should be recognized?
A. $25 million
B. $115 million
C. $85 million [CORRECT]
D. $0, because all intangibles are subsumed into goodwill
Correct Answer: C
Rationale: Goodwill = Purchase Price − Fair Value of Identifiable Net Assets. Total
identifiable net assets = $45M + $30M + $25M + $15M + $60M = $175M. Goodwill =
$200M − $175M = $85M. Option D is incorrect because identifiable intangibles meeting
the separability or contractual-legal criterion are recognized separately from goodwill
under ASC 805.
,Q3: Which of the following statements correctly describes goodwill under US GAAP?
A. Goodwill is amortized over its estimated useful life, not to exceed 40 years
B. Goodwill represents future economic benefits arising from assets that are individually
identified and separately recognized
C. Goodwill is an intangible asset representing the excess of purchase price over the fair
value of identifiable net assets acquired in a business combination [CORRECT]
D. Goodwill generated internally by a company is recognized at fair value on the balance
sheet
Correct Answer: C
Rationale: ASC 350-20-20 defines goodwill as the excess of the cost of an acquired
entity over the net of the amounts assigned to assets acquired and liabilities assumed.
Option A is incorrect because goodwill is not amortized (public companies); B
incorrectly states goodwill arises from individually identified assets; D is incorrect
because internally generated goodwill is never recognized under ASC 350.
Q4: In a business combination, which of the following would NOT be considered an
identifiable intangible asset separate from goodwill?
, A. A patent with a remaining legal life of 12 years
B. A customer list with demonstrable future economic benefits
C. The assembled workforce of the acquired company [CORRECT]
D. A trademark registered with the USPTO
Correct Answer: C
Rationale: Under ASC 805, an assembled workforce does not meet the separability or
contractual-legal criterion for recognition as an intangible asset separate from goodwill;
its value is subsumed into goodwill. Options A, B, and D all meet the criteria for separate
recognition as identifiable intangible assets.
Q5: On March 15, 2026, Meridian Corp acquired Delta Inc. for $500 million. The fair
value of Delta's identifiable assets was $380 million, and the fair value of liabilities
assumed was $90 million. Additionally, Meridian incurred $8 million in
acquisition-related legal fees and $3 million in due diligence costs. What amount of
goodwill should Meridian recognize?
A. $210 million
B. $219 million
C. $210 million, with $11 million expensed as incurred [CORRECT]
