In Jurisdictions Where the Impairment of Goodwill Is Not Tax

question 2

Multiple Choice

In jurisdictions where the impairment of goodwill is not tax deductible, AASB 112 Income Taxes:

• A) requires that any deferred tax items for goodwill be capitalised in the carrying amount of goodwill.
• B) requires that any deferred tax items in relation to goodwill be recognised directly in equity.
• C) does not permit the application of deferred tax accounting to goodwill.
• D) allows the recognition of a deferred tax item in relation to goodwill.

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Definitions:

Total Fixed Costs

The sum of all costs associated with the production of goods or services that do not change with the level of output, such as rent, salaries, and equipment maintenance.

Fixed Costs

Fixed costs are business expenses that remain constant irrespective of the level of goods or services produced, such as rent, salaries, or loan payments.

Output

The total amount of goods and services produced by a firm or country.

Average Fixed Costs

The fixed expenses of a business divided by the number of units produced, demonstrating how those costs dilute with increased production.