17. Goodwill created by an acquisition: a. affects the cash flows of the acquiri

Question

17. Goodwill created by an acquisition: a. affects the cash flows of the acquiring firm on an annual basis for a period of years. b. must be reviewed each year to determine its current value to the firm. c. reduces the taxable income of the firm as it is expensed. d. has no effect on the reported earnings of a firm when it is expensed. e. is recorded in an amount equal to the fair market value of the assets of the target firm. 18. The incremental cash flows of a merger can relate to changes in which of the following? I. revenue II. capital needs III. costs IV. taxes a. I and II only b. II, III, and IV only c. I, III, and IV only d. I, I, and III only e.I, II, III, and 19. Which of the following are examples o reductions which can result from an acquisition? I. spreading overhead f cost II. eliminating duplicate back office functions by sharing central faciliies II buying raw materials in larger quantities at a lower per unit cost IV. gaining economies of scale a. I and III only b. I and IV only c. I, II, and IV only d. II, III, and IV only e. I, II and IV

Explanation / Answer

Answer for 17

Goodwill reduces tax expense

Hence option C is correct.

Answer for 18

All the other matters hence Option e is correct response

Answer 19

Iption E is correct response

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