Which of the following properly describes the accounting for goodwill?Multiple ChoiceGoodwill is amortized over its useful life.Goodwill is the difference between the amount paid for a company relative to the book value of the acquired company's net assets.Goodwill is written down when it has been determined to be impaired.Goodwill is recorded when it is internally generated.

Goodwill is referred to as an intangible asset that helps in earning super-profits for the company.

Answered: Which of the following properly…

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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On January 1, 2010, P Company acquired the net assets of S Company for $1,580,000 cash. The fair value of S Co. identifiable net assets was $1,310,000 on this date. P Company decided to measure goodwill impairment using the present value of future cash flows to estimate the fair value of the reporting unit (S Co.). The information for these subsequent years is as follows: Carrying value of SCo. Identifiable Net Assets $1,160,000 $1,120,000 Fair Value S Co. Identifiable Net Assets $1,190,000 $1,210,000 Present value of Future Cash Flows $1,390,000 $1,400,000 Year 2011 2012 * Identifiable net assets do not include goodwil.
if the value implied by the purchase price of an acquired company exceeds the fair values of the identifiable net assets, the excess should be a. allocated to reduce any previously recorded goodwill and classify any remainder as an ordinary gain b. allocated to reduce current and longlived assets c. allocated to gain on acquisition d. allocated to goodwill
The meaning of goodwill in accounting is: Multiple Choice The amount by which a company's value exceeds the value of its individual assets and liabilities. Long term assets held as investment. The support of the board of directors for the operating decisions of management. The cost of developing, maintaining, or enhancing the value of a trademark. Rights granted to an entity to deliver a product or service under specified conditions.
What is goodwill, and what are the unique aspects of accounting for it?
Consolidated Balance Sheet Working Paper, Identifiable Intangibles International Auto (IA) acquires all of the stock of Genuine Parts (GP) and reports the acquisition as a stock investment on its own books. The acquisition involves the following payments. All amounts are in thousands. Cash paid to GP shareholders $10,000 2,400 Cash paid to consultants and lawyers Fair value of new IA stock issued, 1,000 shares, $4 par 72,000 1,800 500 Stock registration fees, paid in cash Fair value of earnings contingency The earnings contingency, if paid, will occur three years subsequent to the acquisition. The balance sheet accounts of GP and IA, just prior to the acquisition, are as follows: International Auto (in thousands) Current assets Fixed assets, net Trademarks Current liabilities Long-term liabilities Common stock, par value Additional paid-in capital Retained earnings Accumulated other comprehensive income Treasury stock Total Book Value Dr (Cr) $60,000 840,000 178,000 (50,000) (700,000)…
The impairment test for goodwill is conducted based on the cash-generating unit to which the goodwill has been assigned. After an impairment loss is recorded for goodwill, the recoverable amount becomes the basis for the impaired asset and is used to calculate amortization in future periods. options : both statement false first statement true and second statement false fisrt statement false and second statement ttrue . both sttament true
Explain the nature of lump-sum purchases including the factor(s) to be considered and the process/steps to properly account for and reflect the newly acquired assets on the balance sheet.
During the measurement period, which of the following may affect the amount ofgoodwill from business combination? A.New information regarding estimates in the contingent consideration that are not existing atthe date of acquisitionB.Nothing can affect the amount of goodwill.C.New information regarding estimates in the contingent consideration that are existing at thedate of acquisition.D.New information regarding estimates in the contingent consideration
If an intangible asset is acquired as a part of the business combination it's recognised at: a. Fair value b. Cost c. Carring amount d. None of the given options
Which of the following is/are true regarding goodwill achieved through acquisition as part of business combination? Where the acquirer was able to purchase the business at a discount, the excess of the market capitalization over the consideration transferred will be recognized in profit or loss. The acquirer shall recognize goodwill as of the acquisition date measured as the excess of the aggregate of the consideration transferred over the net of the fair values of all the assets acquired and the liabilities assumed Group of answer choices Both statements are true. None of these statements are true. 2 only. 1 only.
The following are properly classified as capital expenditure, except: a. Expenses to promote business goodwill b. Acquisition of intangibles c. Rentals under a “Lease-to-Own” agreement d. None of the above
The reason goodwill is sometimes referred to as a master valuation account is because a. it represents the purchase price of a business that is about to be sold.b. it is the difference between the fair market value of the net tangible and identifiableintangible assets as compared with the purchase price of the acquired business.c. the value of a business is computed without consideration of goodwill and thengoodwill is added to arrive at a master valuation.d. it is the only account in the financial statements that is based on value, all otheraccounts are recorded at an amount other than their value.

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