Do you calculate DTL on step up of equity + existing goodwill or not (LBO test)
So I've got teached to calculate the DTL as follows:
- Purchase Equity Value
- Less Book Value of Equity
- Plus Existing Goodwill
= Step-up of Equity
That is the base for calculating the intangible step up.
Now I have seen some case solutions on other/older LBO tests which don't add the existing goodwill before calculating the step up of equity, thus having a lower intangibles write up.
What is best pracitce here?
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