Which Statement About Negative Goodwill Is True

question 97

Multiple Choice

Which statement about negative goodwill is true?

• A) Negative goodwill is not recorded.
• B) Negative goodwill should be recorded as a direct credit to retained earnings.
• C) Negative goodwill should be allocated proportionately to reduce the cost of all assets acquired on the basis of their relative market values.
• D) Negative goodwill should be allocated proportionately to reduce the cost of all assets acquired except long- term investments and other financial assets on the basis of their relative market values.

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Definitions:

Resistance

The act of opposing, standing against, or refusing to comply with something.

Denial

A defense mechanism where a person refuses to accept reality or facts, acting as if a painful event, thought, or feeling did not exist.

Defense Mechanisms

Protective strategies unconsciously applied to avoid the discomfort arising from thoughts or feelings that are not acceptable.