Accredited Business Valuation (ABV) Practice Test 2025 - Free ABV Practice Questions and Study Guide

Indefinite life goodwill under ASC 350 for private companies is treated as an intangible asset that must be amortized over a reasonable period, which should not exceed ten years. This accounting standard acknowledges that while goodwill does not have a predetermined expiration date, it is essential to systematically allocate the cost of such goodwill over time through amortization. This approach helps reflect the asset's value on the financial statements more accurately and ensures that the financial results of the company are not overly inflated by unmitigated goodwill.

Recognizing goodwill in this manner balances the need for transparency and accurate representation of a company's financial condition with the practical understanding that even goodwill can lose value over time, justifying the amortization strategy.