The Release of AASB 138 Has Had What Impact on the Methods

question 56

Multiple Choice

The release of AASB 138 has had what impact on the methods of amortising goodwill?

• A) The choice to use the inverted sum-of-digits method was phased out over a period of 15 years, to be replaced by straight-line depreciation.
• B) The option to amortise goodwill was removed and replaced with annual impairment testing.
• C) Entities were given the option of continuing to amortise goodwill or to subject it to impairment testing each year.
• D) All entities were required to amortise goodwill over 20 years using the straight-line method to allow comparisons.
• E) None of the given answers.

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Definitions:

Business Conditions

The state of the economic and market environment that affects the operation, performance, and strategy of companies.

Real Options

Financial analysis techniques that value the flexibility of making future investment choices under uncertain conditions.

Worst Case Scenario

The most adverse or negative outcome that can happen in a given situation.

Potential Cash Flows

Forecasted cash receipts and payments that a company expects from its operations and investments.