Which of the Following Statements About Accounting for Mergers Is

question 3

Multiple Choice

Which of the following statements about accounting for mergers is most CORRECT?

• A) Goodwill is amortized for shareholder reporting.
• B) Goodwill is amortized for Federal tax purposes.
• C) Goodwill is no longer created in a merger.
• D) Answers a and b are correct.
• E) None of the statements above is correct.

---

Definitions:

Depreciation

The accounting method of allocating the cost of a tangible asset over its useful life, reflecting a decrease in value over time.

Investing

Dispensing money with the anticipation of making an income or profit.

Interest Rate

The percentage charged on borrowed money or paid on invested capital, reflecting the cost of borrowing or the reward for investing.

Investing

The act of allocating resources, typically money, with the expectation of generating an income or profit.