All of the Following Statements Are True About Goodwill EXCEPT

question 79

Multiple Choice

All of the following statements are true about goodwill EXCEPT:

• A)goodwill is only recorded when it is purchased in the acquisition of another company.
• B)goodwill is not amortized.
• C)in rare cases, companies can record goodwill that they create for their own business.
• D)goodwill has an indefinite life.

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Definitions:

Nominal Interest Rate

The named or quoted rate usually stated on an annually compounded basis. May be different from the effective rate due to non-annual compounding.

Real Interest Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing or real yield on an investment.

Inflation Premium

The additional interest rate that lenders demand to compensate for the loss of purchasing power of money due to inflation.

Yield Curve

The relationship between interest rates and the term of debt, generally expressed graphically. A normal yield curve is upsloping, reflecting rates that increase with increasing term. An inverted curve is downsloping.