Which One of the Following Is NOT True About Goodwill

question 25

Multiple Choice

Which one of the following is NOT true about goodwill?

• A) It is an intangible asset.
• B) It represents the value of all unrecorded assets acquired in a merger.
• C) It equals the premium paid over the fair market value of the assets acquired in a merger.
• D) When goodwill appears on a firm's balance sheet, it reduces the firm's net worth by that amount.

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Definitions:

Dominant Strategy

A strategy that always provides a better outcome for a player, no matter what the other players do.

Reward/Risk Ratio

A financial metric that compares the expected returns of an investment to the amount of risk undertaken to capture these returns.

Nonsystematic Variance

The portion of an asset's total variance that is attributable to factors unique to that specific asset, as opposed to broader market influences.

Market Index

A metric that measures the performance of a basket of securities intended to represent a particular market or segment of it, like the S&P 500 or NASDAQ.