The Inclusion of the Intangible Asset Goodwill in the Financial

question 27

Multiple Choice

The inclusion of the intangible asset goodwill in the financial statements of a company indicates:

• A)That the company has a favorable reputation with its customers.
• B)A monopoly position in the industry or superior management.
• C)An unbroken record of annual earnings and dividends.
• D)That the company has purchased a going business at a price in excess of the fair market value of the net identifiable assets.

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Definitions:

Internal Rate of Return

A financial metric used to estimate the profitability of potential investments, representing the discount rate that makes the net present value of all cash flows equal to zero.

Managers

Individuals responsible for directing and overseeing the operations and strategic direction of a company or organization.

Practice

The repeated exercise or application of an activity or skill to acquire or maintain proficiency in it.

NPV

Net Present Value, a calculation used to determine the current value of a series of future cash flows.