Which of the Following Statements Is Correct Regarding Accounting Treatment

question 14

Multiple Choice

Which of the following statements is correct regarding accounting treatment of goodwill?

• A)Goodwill is recorded as an asset and is not written off as an expense unless its value decreases.
• B)Goodwill is recorded as an asset and amortized over 5 years regardless of any change in value.
• C)Goodwill is recorded as an asset and amortized over 40 years unless its value decreases.
• D)Goodwill is expensed immediately in the year acquired.

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Definitions:

Money Supply

The aggregate sum of liquid assets within an economy at a given time, including cash, bank deposits, and assets that can be quickly turned into cash.

Demand for Money

The desire or need by individuals and businesses to hold liquid assets, primarily currency and demand deposits, for transactional, precautionary, and speculative purposes.

Nominal GDP

Nominal Gross Domestic Product refers to the market value of all final goods and services produced within a country in a given period, measured in current market prices.

Expansionary Monetary Policy

A monetary policy strategy used by central banks to increase the money supply to stimulate economic growth, typically by lowering interest rates.