With Respect to the Recognition of Goodwill in a Business

question 118

Multiple Choice

With respect to the recognition of goodwill in a business combination, which of the following statements is true?

• A) Only US GAAP requires recognition of goodwill when the fair value of the consideration transferred exceeds the net fair value of assets and liabilities.
• B) US GAAP standards require goodwill to be allocated to reporting units expected to benefit from the goodwill.
• C) Only IFRS standards require annual assessments for goodwill impairment.
• D) IFRS requires a reporting unit's implied fair value for goodwill to be calculated as the excess of such unit's fair value over the fair value of its identifiable net assets.
• E) Neither US GAAP, nor IFRS, provide that goodwill impairments will not be recoverable once recognized.

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Definitions:

Chi-Squared Distribution

A statistical distribution that is used to describe the distribution of a sum of the squares of k independent standard normal random variables.

Degrees of Freedom

In statistical analysis, the number of independent values or quantities that can vary in the calculation of a statistic, used in assessing the significance of the statistic.

Friedman Test

A non-parametric statistical method for identifying treatment differences across several trials.

Sign Test

An assessment method without parametric assumptions, designed to check for differences in the median of matched data points.