Goodwill Recorded by an Acquiree in a Business Combination Must

question 40

Multiple Choice

Goodwill recorded by an acquiree in a business combination must be:

• A) recognised at fair value on acquisition.
• B) recognised at carrying amount on acquisition.
• C) not recognised in the business combination.
• D) none of the above.

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Definitions:

Annual Cash Inflow

The total amount of money received by a company over a year, including revenues from sales, investments, and other sources.

Net Present Value

An economic indicator that finds the disparity between cash inflows' present value and the present value of cash outflows during a certain period.

Discount Rate

A rate used to determine the present value of future cash flows; it's often used in discounted cash flow analysis to account for the time value of money.

Net Present Value

The variance between cash inflows and outflows' present value over time, utilized to evaluate an investment's profitability.