As Part of Adopting IFRS,goodwill Acquired in a Business Combination

question 44

Multiple Choice

As part of adopting IFRS,goodwill acquired in a business combination is no longer amortised.Instead,the acquirer shall test goodwill for impairment (AASB 3 "Business Combinations") .When is goodwill considered to be impaired?

• A) If the recoverable amount of the cash generating unit is greater than the unit's carrying amount.
• B) If the recoverable amount of the cash generating unit is less than the unit's carrying amount.
• C) If the value in use of the cash generating unit is greater than the unit's carrying amount.
• D) If the fair value less costs to sell is greater than the unit's carrying amount.
• E) None of the given answers.

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Definitions:

CPI

Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, as an indicator of inflation.

Consumer Price Index

A gauge that determines the aggregate weighted cost of various consumer goods and services, such as healthcare, food, and transportation, for the purpose of estimating inflation figures.

Substitution Bias

The phenomenon where consumers change their preferences to buy cheaper alternatives as prices rise, which can lead to inaccuracies in measuring inflation.

Consumer Price Index

A metric assessing the weighted average cost of a selection of consumer items and services like food, transportation, and medical services, utilized to determine the inflation level.