With Respect to the Recognition of Goodwill in a Business

question 118

Multiple Choice

With respect to the recognition of goodwill in a business combination, which of the following statements is true?

• A) Only US GAAP requires recognition of goodwill when the fair value of the consideration transferred exceeds the net fair value of assets and liabilities.
• B) US GAAP standards require goodwill to be allocated to reporting units expected to benefit from the goodwill.
• C) Only IFRS standards require annual assessments for goodwill impairment.
• D) IFRS requires a reporting unit's implied fair value for goodwill to be calculated as the excess of such unit's fair value over the fair value of its identifiable net assets.
• E) Neither US GAAP, nor IFRS, provide that goodwill impairments will not be recoverable once recognized.

---

Definitions:

External Secondary Data

Information that has been collected previously by other entities such as companies, government agencies, or research organizations, and is utilized for research or analysis purposes.

Paragraph Style

A set of typographic settings, such as indentation, line spacing, and text alignment, applied to organize text into coherent paragraphs.

Block Style

In typing or word processing, a format where all parts of a document align to the left margin without indentations, commonly used in business communication.

Indented Paragraphs

Indented paragraphs involve formatting where the first line of the paragraph starts a few spaces to the right of the left margin, used for emphasis or to denote a new section or idea.