A Major Argument in Favor of the Immediate Write-Off Approach

question 8

Multiple Choice

A major argument in favor of the immediate write-off approach to goodwill is that

• A) it is an asset with future economic benefit.
• B) its true value has no predictive relationship to the cost paid on acquisition.
• C) it does not distort the financial statements.
• D) It provides a more accurate relationship between debt and total assets.

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Definitions:

Pounds

A unit of weight commonly used in the United States, equivalent to 0.453592 kilograms, or a British currency (GBP).

Hedged Delivery

A strategy used in trading and finance to minimize risk by taking compensating positions in related securities or commodities.

Futures Contracts

Legal agreements to buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in the future.

Profit (Loss)

Profit or loss refers to the financial result that is calculated by subtracting total expenses from total revenues, with profit indicating a positive result and loss indicating a negative result.