How Must Goodwill Resulting from Business Combinations Be Treated Under

question 50

Multiple Choice

How must Goodwill resulting from business combinations be treated under U.S.GAAP?

• A)It must be amortized over a period of no more than 40 years.
• B)It must be expensed when it is acquired.
• C)It must be written down when its fair value is less than its carrying value.
• D)It must be written down in no less than 5 years and no more than 40 years.

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Definitions:

Dividend Yield

The ratio of the dividend per share to the share price, illustrating the annual dividend payout of a company in comparison to its share price.

Selling Price

The amount of money for which something is sold in the market, determined by factors like cost, demand, and competition.

Annual Discount Rate

The interest rate used in discounted cash flow analysis to calculate the present value of future cash flows.

Annual Growth

The year-over-year increase, usually presented as a percentage, in a particular metric such as revenue, earnings, or assets.