The Release of IAS 38 Has Had What Impact on the Methods

question 10

Multiple Choice

The release of IAS 38 has had what impact on the methods of amortising goodwill?

• A)The choice to use the inverted sum-of-digits method was phased out over a period of 15 years, to be replaced by straight-line depreciation.
• B)The option to amortise goodwill was removed and replaced with annual impairment testing.
• C)Entities were given the option of continuing to amortise goodwill or to subject it to impairment testing each year.
• D)All entities were required to amortise goodwill over 20 years using the straight-line method to allow comparisons.

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Definitions:

Voucher

A record that acts as proof of a transaction and permits a payment to be made.

Gross Method

An accounting method for recording purchases at the full invoice price without deducting any cash discounts offered.

Net Method

An accounting technique that records purchases after discounts, where the purchase price is reduced by the expected discount amount.

Journal Entries

Journal entries are the foundational recordings of all financial transactions in the double-entry bookkeeping system, indicating debits and credits to accounts.