- CFA Exams
- CFA Level I Exam
- Topic 3. Financial Statement Analysis
- Learning Module 11. Intercorporate Investments
- Subject 5. Business Combinations
CFA Practice Question
Which of the following statements is false?
A. Goodwill is no longer amortized under both U.S. GAAP and IFRS.
B. The pooling method results in greater depreciation expense than the acquisition method.
C. The pooling method fails to reflect the acquisition cost on-balance sheet.
Explanation: Under pooling, assets are reported at the book value of the investee company, not at their fair market value, as is the case with the acquisition method.
User Contributed Comments 4
| User | Comment |
|---|---|
| ThePessimist | Using the acquisition method, you'll generally have a mark-up in basis, and thus higher depreciation. Thus statement C is false. |
| ArekKlauza | Pooling method is no longer part of the CFA curriculum. are we still supposed to know this stuff? |
| akirchner1 | In regards to A. - Instead, goodwill is reviewed for impairment. |
| Calvinboca | Under private company initiative, goodwill can be amortized...accounting curriculum could really use improvement |