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 identifiable intangible assets as compared with the purchase price of the acquired business. c. the value of a business is computed

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 identifiable intangible assets as compared with the purchase price of the acquired business. c. the value of a business is computed

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 16MCQ

See similar textbooks

Similar questions

Which statement regarding goodwill is true? a. goodwill is an unidentifiable intangible assetb. internally developed goodwill should be capitalized while purchased goodwill should beexpensedc. goodwill can be defined as the value attached to the ability of a company to earn a higherthan normal rate of return on the book value of its identifiable assetsd. in some situations, FASB Statement No. 141 requires that negative goodwill be recorded
1. Which statement about negative goodwill is true? Negative goodwill should be recorded as a direct credit to retained earnings. Negative goodwill is not recorded. Negative goodwill should be allocated proportionately to reduce the cost of all assets acquired except long-term investments and other financial assets on the basis of their relative market values. Negative goodwill should be allocated proportionately to reduce the cost of all assets acquired on the basis of their relative market values.
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?
In a business combination, goodwill is defined as the excess of acquisition cost over the a. fair value of assets acquired. b. fair value of assets acquired less the liabilities assumed. c. net book value of assets acquired. d. book value of assets acquired less the liabilities assumed.
ANEMONE Company engaged your services to compute the goodwill in the purchase of another company which provided the following: How is the goodwill?Show solution in good accounting form
The existence of overvalued assets (when comparing book and market value) onthe books of the entity acquired in an acquisition method business combination: A. Increase the excess of cost over book value applicable to unrecorded goodwill. B. Has the same effect as overvalued liabilities on the excess of cost over book value applicable to unrecorded goodwill C. Means that there will never be goodwill recorded in the business combination. D. Decrease the excess of cost over book value applicable to unrecorded goodwill.
In relation to goodwill arising from a business combination, which of the following statements is in accordance with IFRS 3 Business Combination? 1) Goodwill should be measured at cost less accumulated amortization. 2) Goodwill should be amortized on a straight-line basis over its useful life. 3) Goodwill should be measured at cost less impairment losses. 4) Goodwill is only tested for impairment if circumstances indicated that it may be impaired.
The existence of overvalued assets (when comparing book and market value) on the books of the entity acquired in an acquisition method business combination: Decrease the excess of cost over book value applicable to unrecorded goodwill. Has the same effect as overvalued liabilities on the excess of cost over book value applicable to unrecorded goodwill Means that there will never be goodwill recorded in the business combination. Increase the excess of cost over book value applicable to unrecorded goodwill.
Which of the following is/are true regarding goodwill achieved through acquisition as part of business combination? Where the acquirer was able to purchase the business at a discount, the excess of the market capitalization over the consideration transferred will be recognized in profit or loss. The acquirer shall recognize goodwill as of the acquisition date measured as the excess of the aggregate of the consideration transferred over the net of the fair values of all the assets acquired and the liabilities assumed Group of answer choices Both statements are true. None of these statements are true. 2 only. 1 only.
Which of the following statements regarding IFRS impairment testing for goodwill is false? Group of answer choices If the impairment loss is greater than the book value of goodwill, the cash-generating unit proportionally reduces the carrying value of other assets. The firm reports an impairment loss when the recoverable amount of the cash-generating unit is less than the carrying value of the cash-generating unit, including goodwill. IFRS requires an impairment test for goodwill whenever there are significant impairment indicators. The firm can perform the fair value measurement for each cash-generating unit at any time during the fiscal year, as long as it uses the measurement date consistently.
A company should record an asset called "Goodwill" when it purchases another company for an amount that exceeds the fair value of the other company's identifiable net assets. Select one: True False
f the value implied by the purchase price of an acquired company exceeds the fair values of identifiable net assets, the excess should be A. Allocated to reduce long-lived assets B. Allocated to reduce current and long-lived assets C. Allocated to reduce any previously recorded goodwill and classify any remainder as an ordinary gain. D. Allocated goodwill