Which of the Following Is Not an Effect of Choosing

question 30

Multiple Choice

Which of the following is not an effect of choosing the partial goodwill method over the full goodwill method?

• A) There will be differences in the reported amounts at acquisition date in the consolidated statements.
• B) It is more costly to measure the NCI under the partial goodwill method.
• C) Where the parent acquires some or all of NCI after obtaining control, there will be a higher impact on equity attributable to the parent shareholders.
• D) The impairment test on goodwill after acquisition will be more complex under the partial goodwill method.

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Definitions:

Unlimited Liability

A legal structure in which the owners are personally liable for all the debts and liabilities of the business, without any limit.

General Partnership

A business arrangement where two or more individuals agree to share in all assets, profits, and financial and legal liabilities of a jointly-owned business.

Corporation

A legal entity created by individuals, stockholders, or shareholders, with the purpose of operating for profit. Corporations can enter contracts, sue and be sued, and pay taxes apart from their owners.

Secondary Market

The marketplace where investors buy and sell securities they already own, as opposed to the primary market where securities are first issued.