Company A acquires Company B. Company B has a customer list that is not contractually guaranteed but is separable (can be sold). Should this be recognized as an asset separate from Goodwill?

Answer options:

Yes, because it is separable.

No, because it is not contractual.

No, it is part of Goodwill.

Yes, but only if it has an indefinite life.

How to approach this question

Recognition Criteria for Intangibles in Business Combination: 1) Contractual/Legal Criterion OR 2) Separability Criterion (can be sold/transferred).

Full Answer

A.Yes, because it is separable.✓ Correct

ASC 805 requires recognition of intangible assets apart from goodwill if they meet either the contractual-legal criterion OR the separability criterion. A customer list that can be sold/leased/exchanged meets the separability criterion.

Common mistakes

Thinking only contractual assets are recognized.

Question 49 All questions

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