Buster Plc Had Purchased Goodwill to the Value of €100

question 29

Multiple Choice

Buster Plc had purchased goodwill to the value of €100 000 recorded in its consolidated financial statements.The goodwill has been determined to have an indefinite useful life.However,one year later Buster Plc's cash generating units has been determined to have incurred an impairment loss of €13 000.What is the appropriate action for Buster limited to comply with IAS 38 Intangible Assets and IAS 36 Impairment of Assets?

• A)Write-off goodwill in its entirety as goodwill no longer exists.
• B)Recognise impairment loss of €13 000 and credit goodwill.
• C)Amortise goodwill for 20 years using straight-line method.
• D)Recognise impairment loss of €13 000 and credit equity.

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Definitions:

Incentive Structures

Systems or processes designed to motivate individuals to perform certain actions by offering rewards or punishments.

Principal-Agent Problem

Refers to a situation in business where there is a conflict of interest between a principal (e.g., an owner or shareholder) and an agent (e.g., a CEO or manager) hired to act on the principal's behalf.

Stockholders

Individuals or entities that own shares in a corporation, giving them ownership interests and rights to dividends.

Workers

Workers are individuals engaged in physical or intellectual activities to produce goods or provide services in exchange for wages.