Which of the Following Statements Regarding Goodwill Is Not True

question 38

Multiple Choice

Which of the following statements regarding goodwill is not true?

• A)Goodwill is never amortized for financial reporting purposes.
• B)A company must review its goodwill for impairment annually.
• C)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.
• D)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.

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Definitions:

Balance Sheet

A balance sheet is a financial statement that provides a snapshot of a company's financial position, including assets, liabilities, and shareholders' equity at a specific point in time.

Vertical Analysis

A financial analysis method that expresses each item in a financial statement as a percentage of a base figure, facilitating ratio comparisons across companies and time periods.

Revenue Recognition Principle

An accounting principle that outlines the specific conditions under which revenue is recognized and dictates that revenue should be recognized in the accounting period in which it is earned.

Accrued Revenue

Income earned but not yet received, typically recorded with an adjusting journal entry in the accounting records.