Asked by Jaqueline Martinez on May 26, 2024
Verified
At the date of acquisition there is no recognition of a deferred tax item in respect to goodwill because it is a residual amount and the recognition of a deferred tax item would:
A) decrease the profit on consolidation.
B) increase the profit on consolidation.
C) increase the carrying amount of goodwill.
D) decrease the carrying amount of goodwill.
Deferred Tax Item
A financial item on the balance sheet that arises due to timing differences between the recognition of income and expenses for accounting and tax purposes.
Goodwill
An intangible asset that arises when a business is purchased for more than the fair value of its separate net assets.
Recognition
The process of capturing for inclusion in the statement of financial position or statement of profit or loss and other comprehensive income an item that meets the definition of one of the elements of financial statements—an asset, a liability, equity, income, or expenses.
- Comprehend the effects of goodwill on acquisitions and the treatment of deferred tax items.
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Learning Objectives
- Comprehend the effects of goodwill on acquisitions and the treatment of deferred tax items.
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