Which of the Following Statements Is Correct Regarding Accounting Treatment

question 117

Multiple Choice

Which of the following statements is correct regarding accounting treatment of goodwill?

• A) Goodwill is recorded as an asset and then amortized over a period of 5 years.
• B) Goodwill is recorded as an asset. It is not amortized but must be tested for impairment each year.
• C) Goodwill is recorded as an asset and amortized over 40 years unless its value decreases.
• D) Goodwill is expensed immediately in the year of purchase.

---

Definitions:

Car Washing Labour Cost

The expenses associated with labor that are incurred during the process of washing cars.

Least Squares Regression

A statistical method for estimating the relationships among variables by minimizing the square differences between observed and predicted values.

Multiple Regression

A statistical technique that analyzes the relationship between a dependent variable and multiple independent variables to predict outcomes.

Cost Estimation Methods

Various approaches used to predict the future costs associated with a project or product, including empirical cost inference, parametric modeling, and analogical estimation.