How Is Negative Goodwill Accounted for Under U.S.GAAP

question 16

Multiple Choice

How is negative goodwill accounted for under U.S.GAAP?

• A)There is no rule for negative goodwill, because there is no such thing.
• B)It is capitalized and amortized over a period of no more than 40 years.
• C)It is treated as an extraordinary loss on the consolidated income statement.
• D)It is treated as an extraordinary gain on the consolidated income statement.

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Definitions:

Materials

Raw inputs or supplies that are converted into finished goods through the manufacturing process.

Beginning Work

Refers to the initial inventory of goods that are in the process of production at the start of a financial period.

First-in

Often related to inventory management, indicating the principle that the first items produced or acquired are the first to be used or sold.

Processing Department

A division or section in a manufacturing facility where a specific type of processing or production takes place.