The Table Below Shows the Differences in Accounting Treatments for Goodwill

question 8

Essay

The table below shows the differences in accounting treatments for goodwill in three selected countries. $\begin{array} {|c|} \hline\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Accounting for goodwill in selected countries }\quad\quad\quad\quad\quad\quad\end{array}$
$\begin{array} { | l | c | c | c | } \hline & \begin{array} { c } \text { Option to expense } \\\text { immediately }\end{array} & \begin{array} { c } \text { Option to charge to } \\\text { equity }\end{array} & \text { Tax deductible } \\\hline \text { United States } & \text { No } & \text { No } & \text { No* } \\\hline \text { Canada } & \text { No } & \text { No } & \text { Yes } \\\hline \text { Great Britain } & \text { No } & \text { Yes } & \text { No } \\\hline\end{array}$
*Goodwill is tax deductible in the United States under limited circumstances, for the purposes of this question, assume it is not.
Given a company that has recognized significant acquisition goodwill, identify the country whose accounting and tax rules for goodwill would likely result in the highest valuation of the company. Justify and explain your answer.

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Definitions:

JIT

Just-In-Time, a lean manufacturing principle aiming to reduce waste and increase efficiency by receiving goods only as they are needed in the production process.

Small Lot Size

A production strategy where quantities of manufactured items are kept low, allowing for greater flexibility in product variation and reducing inventory costs.