In Verifying the Amount of Goodwill Recorded by an Entity

question 27

Multiple Choice

In verifying the amount of goodwill recorded by an entity, the most convincing evidence that an auditor can obtain is by comparing the recorded value of assets acquired with the

• A) Assessed value as evidenced by tax bills.
• B) Seller's book value as evidenced by financial statements.
• C) Insured value as evidenced by insurance policies.
• D) Appraised value as evidenced by independent appraisals.

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Definitions:

Bondholder

An investor or owner of bonds issued by corporations or governments, entitled to receive interest payments and the principal amount at maturity.

Semiannual Interest

Interest calculated and paid twice a year on investments or loans.

Bond Discount

The difference when the market value of a bond falls below its original principal amount or face value.

Straight-line Method

A method of calculating depreciation by evenly spreading the cost of an asset over its expected useful life.