A Major Argument in Favor of Setting Up Goodwill as an Asset

question 16

Multiple Choice

A major argument in favor of setting up goodwill as an asset without amortization is that

• A) it is inconsistent to amortize purchased but not internally generated goodwill.
• B) it is the cost of resources which will be used up.
• C) its future value is being continuously maintained.
• D) everything needs to pass through the income statement sometime.

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Definitions:

Net Income

The net income of a business once all costs and taxes are subtracted from its total revenues.

Fair Value Through Other Comprehensive Income

A financial accounting method where certain assets are revalued periodically and changes are recorded in other comprehensive income.

Balance Sheet

A financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time.

Fair Value Through Other Comprehensive Income

An accounting treatment for certain investments that are measured at their fair value with changes recognized in other comprehensive income until the investment is sold or disposed of.