For Private Enterprises That Have Acquired Goodwill in a Business

question 5

Multiple Choice

For private enterprises that have acquired goodwill in a business combination, how often should goodwill be tested for impairment?

• A)At least once a year
• B)At least once every two years
• C)Whenever the parent company deems it necessary
• D)Whenever there is a change in circumstances

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Definitions:

Lubricants

Substances applied to reduce friction between surfaces in mutual contact, which ultimately decreases the heat generated when the surfaces move.

Period Cost

Expenses incurred by a business that are not directly tied to production activities, such as administrative and selling expenses.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and are a significant portion of the total production cost.

Administrative Expense

Costs related to the general management and administration of a company, such as salaries of executive personnel, accounting departments, and front office.