On June 30, Year 1, Union, Inc. purchased goodwill of $125,000 when it acquired the net assets of Apex Corp. During Year 1, Union incurred additional costs of developing goodwill, by training Apex employees ($50,000) and hiring additional Apex employees ($25,000). Union's December 31, Year 1, balance sheet should report goodwill of:
　　a.$125,000
　　b.$200,000
　　c.$175,000
　　d.$150,000
　　Answer:A
　　Choice "A" is correct. $125,000 purchased goodwill.Rule: Goodwill acquired in an arms-length transaction is capitalized, but internally created goodwill is expensed because an objective measure of its value is difficult to obtain.