Any Goodwill Created in a Merger Must Be Amortized Over

question 31

True/False

Any goodwill created in a merger must be amortized over its expected life, usually 40 years, for shareholder reporting purposes.

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Definitions:

Gain on Sale

Gain on sale refers to the profit made from selling an asset for more than its book value.

Indirect Method

A method for creating the cash flow statement by modifying net income according to non-cash activities and fluctuations in working capital.

Operating Activities

Activities directly related to the principal revenue-producing activities of an entity, detailed in the cash flow statement.

Amortization

The process of gradually writing off the initial cost of an intangible asset over its useful life, reflecting its consumption, expiration, or obsolescence.