Good will arising from business combination is: a. charged to Retained Earnings after the acquisition is completed b. amortized over 40 years or its useful life whichever is longer c. amortized over 40 years of its useful life whichever is shorter d. never amortized

Good will arising from business combination is: a. charged to Retained Earnings after the acquisition is completed b. amortized over 40 years or its useful life whichever is longer c. amortized over 40 years of its useful life whichever is shorter d. never amortized

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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lowing appropr right 1. Goodwill 2. Amount realized 3. Fair market value 4. Adjusted basis 5. Holding period a. The ability of a business to generate income in excess of a normal rate on assets due to superior managerial skills, market position, new product technology, etc. b. The amount at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having a reasonable knowledge of the relevant facts. c. It is crucial in determining whether gain or loss from the sale or exchange of a capital asset is long term or short term. d. This amount is the sum of the cash and the fair market value of any property or services received, plus any related debt assumed by the buyer. e. The cost or other basis of property reduced by deprecation (cost recovery) allowed or allowable and increased by capital improvements. Match the following terms in the left column with the appropriate definition from the right column. 1.…