Question: In some countries companies can write off goodwill at the
In some countries, companies can write off goodwill at the date of acquisition by directly reducing their shareholders’ equity; that is, the writeoff does not pass through net earnings. Suppose that a Canadian company and a company from a country that allows an immediate writeoff of goodwill agreed to purchase the same company for the same amount of money. As a stock analyst, describe how the statement of financial position and income statement would differ for the two companies after the acquisition. Discuss whether this would provide any advantage for either company.
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