Which of the Following Is Not True About Goodwill

question 33

Multiple Choice

Which of the following is not true about goodwill?

• A)Goodwill reflects the value of knowledgeable employees.
• B)Goodwill reflects the value of a reputation for quality products.
• C)Under IFRS, goodwill has an indefinite life, and firms do not amortize the amount recognized as goodwill.
• D)Firms must test goodwill annually for a loss in value.
• E)Under U.S.GAAP, goodwill has an indefinite life, and firms amortize the amount recognized as goodwill.

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Definitions:

Financial Statement

A documented summary detailing a company's business operations and financial health, usually encompassing the balance sheet, income statement, and statement of cash flows.

Total

The sum or aggregate amount resulting from the addition of individual items or elements in a set.

Credit Purchase

Buying goods or services and deferring payment to a later date, typically recorded as accounts payable.

Liabilities

Economic responsibilities or liabilities a corporation has towards other entities, necessitating repayment through transferring assets like money, merchandise, or services eventually.