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:

Investment

This refers to the allocation of resources, often financial, in assets or projects with an expectation of generating future returns.

Lower Partial Standard Deviation

A measure of the risk of negative asset returns, focusing only on the volatility of returns that fall below the average.

Extremely Negative Returns

Refers to significantly below-average returns on investments, often resulting in substantial losses.

Value At Risk

A financial metric used to estimate the potential loss in value of a portfolio over a defined period for a given confidence interval.