Answer (B) is correct.
The cost of an acquired entity minus the net amount assigned to assets
acquired and liabilities assumed is goodwill. Goodwill is not amortized.
However, goodwill is assigned to a reporting unit that benefited from the
business combination for the purpose of testing impairment. Testing occurs each year at the same time, but different reporting units may be tested at different times. Furthermore, additional testing also may be indicated. Potential impairment of goodwill is deemed to exist only if the carrying amount (including goodwill) of a reporting unit is greater than its fair value. Thus, accounting for goodwill is based on the units of the combined entity into which the acquired entity was absorbed. A reporting unit is an operating segment or one of its components, that is, one level below an operating segment. A component qualifies as a reporting unit if (1) it is a business for which discrete financial information is available, and (2) segment management regularly reviews its operating results. However, similar components are aggregated. These provisions, including the determination of operating segments, apply even if the reporting entity is not required to report segment information.