ADVANCED ACCOUNTING
13th Edition
ISBN: 9781264046263
Author: Hoyle
Publisher: MCG
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Question
Chapter 3, Problem 7P
To determine
Identify the appropriate answer for the given statement from the given choices.
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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
Choose the correct.Goodwill recognized in a business combination must be allocated among a firm’s identified reporting units. If the fair value of a particular reporting unit with recognized goodwill falls below its carrying amount, which of the following is true?a. No goodwill impairment loss is recognized unless the implied value for goodwill exceeds its carrying amount.b. A goodwill impairment loss is recognized if the carrying amount for goodwill exceeds its implied value.c. A goodwill impairment loss is recognized for the excess of a reporting unit’s carrying amount over its fair value, not to exceed the carrying amount of goodwill.d. The reporting unit reduces the values assigned to its long-term assets (including any unrecognized intangibles) to reflect its fair value.
In reference to the determination of goodwill impairment, which of the following statements is correct?
Question 2Answer
a.
The goodwill impairment test under ASC 350-20-35 is a three-step process.
b.
Under FASB, firms must first compare carrying values (book values) at the headquarter level.
c.
Firms can reverse previously recognized impairment losses.
d.
If the reporting unit's fair value exceeds its carrying value, goodwill is unimpaired.
Chapter 3 Solutions
ADVANCED ACCOUNTING
Ch. 3 - Prob. 1QCh. 3 - Prob. 2QCh. 3 - Prob. 3QCh. 3 - Prob. 4QCh. 3 - When a parent company applies the initial value...Ch. 3 - Several years ago, Jenkins Company acquired a...Ch. 3 - Benns adopts the equity method for its 100 percent...Ch. 3 - Prob. 8QCh. 3 - Prob. 9QCh. 3 - Prob. 10Q
Ch. 3 - Prob. 1PCh. 3 - Prob. 2PCh. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Paar Corporation bought 100 percent of Kimmel,...Ch. 3 - Prob. 6PCh. 3 - Prob. 7PCh. 3 - If no legal, regulatory, contractual, competitive,...Ch. 3 - Prob. 9PCh. 3 - Prob. 10PCh. 3 - What is Phoenixs consolidated retained earnings...Ch. 3 - On its December 31, 2018, consolidated balance...Ch. 3 - Prob. 13PCh. 3 - Herbert, Inc., acquired all of Rambis Companys...Ch. 3 - Prob. 15PCh. 3 - Prob. 16PCh. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Prob. 21PCh. 3 - Prob. 22PCh. 3 - Following are selected account balances from...Ch. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 27PCh. 3 - Prob. 28PCh. 3 - Prob. 29PCh. 3 - Prob. 30PCh. 3 - On January 1, 2017, Pinnacle Corporation exchanged...Ch. 3 - Following are selected accounts for Mergaronite...Ch. 3 - Prob. 33PCh. 3 - Prob. 34PCh. 3 - Prob. 35PCh. 3 - Prob. 36PCh. 3 - Prob. 37PCh. 3 - Prob. 38PCh. 3 - Prob. 39APCh. 3 - Prob. 40APCh. 3 - Prob. 1DYSCh. 3 - FASB ASC AND IASB RESEARCH CASE A vice president...Ch. 3 - Prob. 4DYSCh. 3 - Prob. 5DYS
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Similar questions
- Which of the following statements regarding IFRS accounting for goodwill is/are incorrect: (i) Negative goodwill is reported as a liability (ii) A goodwill impairment expense decreases the carrying amount of goodwill on the consolidated SoFP (iii) The calculation of goodwill at acquisition date must include the fair value of non-controlling interests in the acquireearrow_forwardA 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 Falsearrow_forwardWhich of the following statements is true about goodwill? Goodwill may be recorded when the fair value of a company's assets exceeds their а. cost. b. Goodwill may be recorded when one company acquires another in a business combination. С. Goodwill may be recorded when a company has exceptional customer relations. d. Goodwill may be recorded when it is identified within a company.arrow_forward
- An impairment loss for goodwill is calculated as the difference between ________. Group of answer choices the fair value of the reporting unit (including goodwill) and the book value of the reporting unit (including goodwill) the implied fair value of goodwill and its book value the fair value of the reporting unit (including goodwill) and the fair value of its net assets (without goodwill) the book value of the reporting unit (including goodwill) and the book value of its net assets (without goodwill)arrow_forwardIn 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.arrow_forward6.) In reference to the determination of goodwill impairment, which of the following statements is correct? The goodwill impairment test is a three-step process. b. If the reporting unit's fair value exceeds its carrying value, goodwill is unimpaired. Firms must first compare carrying values (book values) at the headquarter level. d. a. с. Firms can reverse previously recognized impairment losses.arrow_forward
- Which of the following statements regarding goodwill is false? A company must review its goodwill for impairment whenever events or changes in circumstances occur that would more likely than not reduce the fair value below its carrying value. A company records goodwill at the time that it acquires another company or at the time it determines that material intellectual capital exists in its employees. A company must review its goodwill for impairment annually. Goodwill is never amortized for financial reporting purposes.arrow_forwardWhat 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?arrow_forwardIn 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.arrow_forward
- The unamortized excess account is a. the excess purchase cost that is attributable to goodwill. b. the excess purchase cost that is attributable to a bargain purchase. c. the excess purchase cost over the subsidiary’s net assets’ book value d. the excess purchase cost over the subsidiary’s net assets’ fair value.arrow_forwardWhich of the following statements is true about goodwill? O a. Goodwill may be recorded when it is identified within a company. O b. Goodwill may be recorded when a company has exceptional customer relations. O c. Goodwill may be recorded when the fair value of a company's assets exceeds their cost. O d. Goodwill may be recorded when one company acquires another in a business combination.arrow_forwardChoose the correct. When should a consolidated entity recognize a goodwill impairment loss?a. If both the fair value of a reporting unit and its associated implied goodwill fall below their respective carrying amounts.b. Whenever the entity’s fair value declines significantly.c. If the fair value of a reporting unit with goodwill fall below its carrying amount.d. Annually on a systematic and rational basis.arrow_forward
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