When Goodwill Is Acquired by an Investor in an Associate,the

question 25

Multiple Choice

When goodwill is acquired by an investor in an associate,the amortisation of goodwill is:

• A)spread evenly across the useful life of the investment;
• B)not permitted;
• C)included in the determination of the investor's share of the associate's profit or loss;
• D)included in the revaluation of the investment.

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Definitions:

Labour Efficiency Variance

The difference between the budgeted labor hours or costs and the actual labor hours or costs incurred.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead based on hours worked and the standard cost of variable overhead for those hours.

Standard Variable Overhead Rate

The predetermined rate at which variable overhead costs are applied to production activities, based on an expected level of activity.