Which of the Following Statements Regarding Goodwill and Fair Value

question 9

Multiple Choice

Which of the following statements regarding goodwill and fair value differences from the day that an associate or joint venture is acquired, is FALSE?

• A)Where differences between fair values and carrying amounts exist at the acquisition date for the investee's identifiable assets and liabilities, subsequent equity recognized by the associate or joint venture may include fair value adjustments relating to these differences.
• B)Amortization of goodwill relating to an associate or a joint venture is permitted.
• C)Calculation of adjustments for differences between carrying amounts and fair values is always on an after-tax basis.
• D)Adjustments for any goodwill arising on acquisition would occur on impairment of goodwill.

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Definitions:

Interest Rate

is the cost of borrowing money or the return for investing, usually expressed as a percentage of the principal over a one-year period.

Consumption Function

An economic formula representing the relationship between total consumption and gross national income, positing that consumption patterns are directly related to income levels.

Price Level

A measure of the average prices of goods and services throughout the economy, indicating the cost of living or inflation rate.

Net Wealth

The total value of all financial and non-financial assets owned by an individual, company, or country, minus any debts.