95. Which of the following statements regarding goodwill is false?
Goodwill is never amortized for financial reporting purposes.
A company must review its goodwill for impairment annually.
A company must review its goodwill for impairment whenever events or changes in circumstances occur that
would more likely than not reduce the fair value below its carrying value.
A company records goodwill at the time that it acquires another company or at the time it determines that
material intellectual capital exists in its employees.
ACCT.WHAL.16.12.5 – LO: 12.5
United States – BUSPROG: Reflective Thinking – BUSPROG: Analytic
United States – OH – Default City – AICPA: FN-Decision Modeling
96. Which of the following statements concerning internally developed goodwill is true?
It is a separately identifiable asset.
It is capitalized at its cost.
The costs associated with its development are expensed as incurred.
Measuring its value is relatively easy and faithfully represented.
ACCT.WHAL.16.12.5 – LO: 12.5
United States – BUSPROG: Reflective Thinking – BUSPROG: Analytic
United States – OH – Default City – AICPA: FN-Decision Modeling
97. The Clementine Company agreed to purchase the Orange Company for $650,000. At the date of purchase, Orange had
current assets with a fair market value of $400,000, noncurrent assets (including no marketable securities) with a fair
market value of $700,000, and liabilities of $500,000. In accounting for this transaction, Clementine should
record noncurrent assets at $650,000
record a debit of $50,000 as a loss on the purchase
record goodwill of $50,000 to be reviewed annually for impairment
record current assets at $550,000
ACCT.WHAL.16.12.5 – LO: 12.5
United States – BUSPROG: Reflective Thinking – BUSPROG: Analytic
United States – OH – Default City – AICPA: FN-Decision Modeling