Which of the following statements regarding book-tax differences associated with purchased goodwill is false?
A)It is possible to have no book-tax difference in a year.
B)In a year when goodwill is impaired and yet fully amortized for tax purposes (so no tax amortization of the goodwill for that year), the book-tax difference will be unfavorable.
C)Temporary book-tax differences associated with goodwill are always favorable.
D)If goodwill has been fully amortized for tax purposes in a previous year, the book-tax difference is equal to the amount of impairment recognized.

Question

Quizplus · Accepted Answer

Temporary book-tax differences associated with goodwill can be either favorable or unfavorable, depending on the timing of the amortization of goodwill for tax and book purposes. It is not always the case that they are favorable.

Which of the Following Statements Regarding Book-Tax Differences Associated with Purchased