Four years ago, Bettis Inc. paid a $5 million lump-sum price to purchase a business. Bettis allocated $600,000 of the price to goodwill. Which of the following statements is true?
A) The accounting treatment of the goodwill does not result in any book/tax difference in the current year.
B) This year, Bettis has a $40,000 unfavorable temporary difference because of the accounting treatment of goodwill.
C) This year, Bettis has a $40,000 favorable temporary difference because of the accounting treatment of goodwill.
D) None of these choices are true.
Correct Answer:
Verified
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