Which Statement Regarding Goodwill Is True

question 119

Multiple Choice

Which statement regarding goodwill is true?

• A) Goodwill is an unidentifiable intangible asset.
• B) Internally developed goodwill should be capitalized while purchased goodwill should be expensed.
• C) Goodwill can be defined as the value attached to the ability of a company to earn a higher than normal rate of return on the book value of its identifiable assets.
• D) In some situations, GAAP and IFRS requires that negative goodwill be recorded.

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Definitions:

Technological Advance

Technological advance refers to the progression and innovation in technology that often leads to improved efficiency, production capabilities, and new product developments.

Preferred Mix

The optimal combination of goods and services an economy should produce, taking into account consumer preferences, resource availability, and socio-economic objectives.

Venture Capital

Financing provided by investors to startup companies and small businesses with perceived long-term growth potential.

Retained Earnings

The portion of a company's profits not paid out as dividends, but reinvested in the business.