Income Tax Expert Question:
Download Job Interview Questions and Answers PDF
Tell me do you know what is goodwill?
Answer:
Goodwill is an asset that captures excess of the purchase price over fair market value of an acquired business. Let’s walk through the following example: Acquirer buys Target for $500m in cash. Target has 1 asset: PPE with book value of $100, debt of $50m, and equity of $50m = book value (A-L) of $50m.
☛ Acquirer records cash decline of $500 to finance acquisition
☛ Acquirer’s PP&E increases by $100m
☛ Acquirer’s debt increases by $50m
☛ Acquirer records goodwill of $450m
☛ Acquirer records cash decline of $500 to finance acquisition
☛ Acquirer’s PP&E increases by $100m
☛ Acquirer’s debt increases by $50m
☛ Acquirer records goodwill of $450m
Download Income Tax Expert Interview Questions And Answers
PDF
| Previous Question | Next Question |
| Tell me at what rate firms are required to pay tax on their income? | Tell us who are resident but not ordinary resident? |