Goodwill is recorded in the books when

As per AS-26, goodwill whose value can be measured in terms of money or money’s worth is recorded in the books of account and it is called purchased goodwill.

Purchased goodwill is recorded in the books of account because its value can be measured in terms of money. 

If the owner valued its own goodwill, it may be overstated or understated and both situations are not good for the financial statements.

Hence, the correct answer is option B: Money or money's worth is paid for acquiring goodwill.