In Reference to International Accounting for Goodwill,U

question 6

Multiple Choice

In reference to international accounting for goodwill,U.S.companies have complained that past U.S.accounting rules for goodwill placed them at a disadvantage in competing against foreign companies for merger partners.Why?

• A)Previous rules required immediate write off of goodwill which resulted in a one-time expense that was not required under international rules.
• B)Previous rules required amortization of goodwill which resulted in an ongoing expense that was not required under international rules.
• C)Previous rules did not permit the recording of goodwill,thus resulting in a lower asset base than international counterparts would recognize.
• D)All of the above are correct.

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Definitions:

Perfectly Elastic

A situation where the quantity demanded or supplied changes infinitely in response to any change in price.

Total Revenue

The overall income generated by a business through the sale of goods or the delivery of services within a certain period.

Elasticity of Demand

Elasticity of Demand measures how much the quantity demanded of a good responds to a change in the price of that good, indicating how sensitive consumers are to price changes.

Necessity

An essential requirement or need for something.