How is goodwill treated under FASB ASC 350?

Goodwill is treated under FASB ASC 350 as an indefinite-lived intangible asset, which means it is not amortized. Instead of amortization, companies are required to test goodwill for impairment at least annually. This approach reflects the view that goodwill does not have a predictable life span that would justify systematic write-offs over a specified period.

By not amortizing goodwill, businesses maintain a clearer picture of the long-term value of the asset. The annual impairment testing is crucial as it ensures that any decrease in the value of goodwill is recognized in the financial statements, which offers a more accurate financial representation and helps users understand the true economic condition of the reporting entity.

The other options, while they reflect practices that may apply to other intangible assets, do not align with the standards set forth in FASB ASC 350 for goodwill. As such, the treatment of goodwill as not amortized aligns with its classification as an indefinite-lived asset that requires annual impairment assessments to assess and reflect any loss in value.