To measure a company's ability to create value after paying acquisition premiums,which of the following adjustments should be made?
I.Adjust reported goodwill upward to recapture historical amortization and impairments.
II.Adjust acquired intangibles upward to recapture historical amortization and impairments.
III.Add the hypothetical accrued interest of the notional goodwill principle.
A)I and II only.
B)II and III only.
C)I and III only.
D)I,II,and III only.

Question

Quizplus · Accepted Answer

Adjusting reported goodwill and acquired intangibles upward to recapture historical amortization and impairments is necessary to accurately measure a company's ability to create value after paying acquisition premiums. Hypothetical accrued interest of the notional goodwill principle (option III) is not necessary for this purpose.

To Measure a Company's Ability to Create Value After Paying