A Factor That Contributes to Recording Goodwill When Acquiring Control

question 63

Multiple Choice

A factor that contributes to recording goodwill when acquiring control of another company is ________.

• A) outstanding management skills of parent company
• B) unique product manufactured by parent company
• C) established brand names by investee company
• D) all of the above

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Definitions:

Financial Risk

Financial risk involves the potential of losing financial resources or assets due to business activities, including market fluctuations, credit risk, and liquidity risk.

Fixed-Rate

Pertains to loans, mortgages, or other financial products that have an interest rate that remains constant for the entire term of the loan.

Payoff Profile

A graphical representation showing the potential profit and loss of an investment strategy at different prices of the underlying asset at expiration.

Hedge

An investment made to reduce the risk of adverse price movements in an asset, usually through derivatives such as options or futures contracts.