According to Private Company rules, how is goodwill amortized?

The correct response regarding the amortization of goodwill, particularly under the guidance for private companies, highlights that goodwill can be amortized over a period not to exceed 10 years. This is in line with the regulations established under the Accounting Standards Update (ASU) which allows private companies to simplify the accounting for goodwill by choosing to amortize it.

This approach provides a more straightforward method for private companies to manage and report goodwill on their financial statements, helping them reduce the complexity and cost associated with regular impairment testing. The 10-year amortization period serves as both a practical limit and a reflection of the expectation that the benefits of goodwill will typically recede within this timeframe.

In contrast, options suggesting that goodwill is not amortized or suggesting different amortization periods do not align with the guidelines applicable to private companies. Not amortizing goodwill would imply an indefinite life categorizations, which is primarily applicable to public companies, while a 20-year period exceeds the specified limit according to the current accounting standards. Therefore, the choice to amortize goodwill over a maximum of 10 years stands as the most accurate representation of the relevant accounting practices.