AASB 138 Contains Some Elements That Seem to Be Reactions

question 33

Multiple Choice

AASB 138 contains some elements that seem to be reactions to opportunistic behaviour by preparers of accounts and to the degree of uncertainty surrounding goodwill as an unidentifiable intangible asset.These elements include:

• A) The prohibition on recording internally generated goodwill.
• B) The requirement to use a specific rate of amortisation.
• C) The specification of impairment testing.
• D) The prohibition on recording internally generated goodwill and the specification of impairment testing.
• E) All of the given answers.

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Definitions:

Decreasing Returns

A concept in economics where each additional unit of input results in a progressively smaller increase in output, often observed in production processes.

Marginal Product

The additional output that is produced by using one more unit of a particular input while holding other inputs constant.

Factor

An element or component, such as land, labor, and capital, that is used in the production of goods and services.

Isoquant

An isoquant is a curve that represents all the combinations of inputs that yield the same level of output in the production process.