In a given year, Adams Corporation has goodwill impairment in excess of the allowable amortization for tax purposes. Adams has a favorable temporary book-tax difference for that year.

Question

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Goodwill impairment exceeding allowable amortization for tax purposes would create an unfavorable temporary book-tax difference, as it would lead to higher expenses recognized for financial reporting purposes than for tax purposes, reducing taxable income less than book income for that year.

In a Given Year, Adams Corporation Has Goodwill Impairment in Excess