In examining financial statements, financial analysts often write off goodwill immediately. Comment on this procedure.
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In examining financial statements, financial analysts often write off
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- How do changes in accounting policies and estimates affect the recognition and measurement of goodwill?How do you view goodwill on the balance sheet - specifically, if certain levels of it would cause concern, identify what level of goodwill would cause you concern and why? If it would not concern you regardless of the amount of goodwill on the balance sheet, explain why.Distinguish between internally generated goodwill and purchased goodwill and explain how each of them may be treated in line with standard accounting principles.
- Match the following descriptions with each of the components in the loan review process. Review Later Involves re-assessing any changes that have occurred within management that may impact the business’ ability to tackle potential issues. Involves re-assessing the direction of the business, potential opportunities, and other issues the company is facing. Involves re-assessing any assets that are being used as protection in the case of default. Involves re-assessing the cash flow and financial position of the borrower. Financial statement review Security review Management review Business reviewRevenue is recognized for accounting purposes when a performance obligation is satisfied. In some situations, revenue is recognized over time as the fair values of assets and liabilities change. In other situations, however, accountants have developed guidelines for recognizing revenue at the point of sale. Explain in what situations it would be appropriate to recognize revenue over time. Ignore income taxes.The reason goodwill is sometimes referred to as a master valuation account is because a. it represents the purchase price of a business that is about to be sold.b. it is the difference between the fair market value of the net tangible and identifiableintangible assets as compared with the purchase price of the acquired business.c. the value of a business is computed without consideration of goodwill and thengoodwill is added to arrive at a master valuation.d. it is the only account in the financial statements that is based on value, all otheraccounts are recorded at an amount other than their value.
- Define goodwill for accounting purposesWhich of the following is not included in the FASB's 5-step model for evaluating when a company should recognize revenue? Identify the contract with a customer. Identify the performance obligations in the contract. Determine the transaction price. Recognize revenue when cash payment is received.What type of "event" results in goodwill being recorded on a company's balance sheet? How is goodwill evaluated to determine whether this specific asset is impaired? If it is deemed to be impaired, what actions does a company need to take?
- Fill in the blanks below with the accounting principle, assumption, or related item that best completes the sentence. ________________________ and _______________________ are the two fundamental qualities that make accounting information useful for decision making. Information that helps users confirm or correct prior expectations has _________________ ___________________. ________________________ enables users to identify the real similarities and differences in economic events between companies. _________________ is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Information is _______________________ if omitting it or misstating it could influence decisions that users make on the basis of the reported financial information. The ________________________ characteristic requires that the same accounting method be used from one accounting…Which of the following should be treated as a change in accounting policy? A change is made in the method of calculating the provision for uncollectible accounts receivable A change from cost model to fair value model in measuring investment property An entity engaging in construction contract for the first time needs on accounting policy to deal with this All of the choices qualify as a change in accounting policyHow can the quality of financial statements be compromised? Discuss fully and explain, giving a numerical example, how the choice of a depreciation method can influence the accuracy of reportable earnings.