Which of the Following Statements Regarding Goodwill Is False

question 50

Multiple Choice

Which of the following statements regarding goodwill is false?

• A) Goodwill is never amortized for financial reporting purposes.
• B) A company must review its goodwill for impairment annually.
• C) A company must review its goodwill for impairment whenever events or changes in circumstances occur that would more likely than not reduce the fair value below its carrying value.
• D) A company records goodwill at the time that it acquires another company or at the time it determines that material intellectual capital exists in its employees.

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Definitions:

Validity Effect

The tendency to believe information is correct or valid simply because it has been repeated many times.

Cognitive Dissonance

A psychological discomfort experienced when holding two or more conflicting cognitions (beliefs, attitudes, or behaviors).

Groupthink

A psychological phenomenon that occurs within a group of people when the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome.

Self-Censorship

The act of withholding one's thoughts, opinions, or feelings due to fear of social or official repercussions.