How Often Should Goodwill Acquired in a Business Combination Be

question 16

Multiple Choice

How often should goodwill acquired in a business combination be tested for impairment?

• A)At least once a year.
• B)At least once every two years.
• C)Whenever there is an indication of impairment.
• D)Whenever there is a change in circumstances in the business.

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Definitions:

Future Earnings Prospects

The expected profitability of a company or investment in future periods based on current and forecasted conditions.

Stock Price

The market value of a single share of a company's stock, determined by supply and demand dynamics in the stock market.

Beta

A measure of the volatility, or systematic risk, of a security or portfolio in comparison to the market as a whole.

Required Rate Of Return

The minimum annual percentage earnings necessary to attract an investor to a particular investment, considering the risk associated with it.