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:

Routine

A sequence of instructions or operations performed repeatedly in a control system or software to accomplish a specific task.

Debt Finance

A method of financing where funds are borrowed and are expected to be paid back with interest.

Equity Finance

A method of raising capital through the sale of shares in a company, giving shareholders ownership interests.

Bond Owners

Individuals or entities that hold the debt securities issued by corporations or governments, earning interest over time.