The intangible assets of an acquired company were valued for accounting purposes from a pre-transaction book value
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Question:
The intangible assets of an acquired company were valued for accounting purposes from a pre-transaction book value of $50 million to $60 million, but not for tax purposes, where the taxable amount remained at $50 million. Assume that the target's finite-life intangible assets are amortized on a straight-line basis over 15 years, for both accounting and tax purposes. Also assume that the target assets will be depreciated at the acquirer's 40% post-acquisition tax rate.
Required:
What is the impact on goodwill as a result of the writing of the book and the absence of a tax increase?
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date: