Amortizing Acquisition Cost

How do you go about modeling an acquisition cost that is to be amortized? Usually you put everything in goodwill and then debt and equity to get the BS to balance.How would you balance it with only a fraction of the cost being recognized each year?

6 Comments
 

Lol no.

What you're talking about is deferred financing fees. If you have an amort expense on the IS and then subtract cash, you're effectively amortizing cash, which makes no sense.

Deferred financing fees come from the debt that is used to finance an M&A transaction. Deferred financing fees are assets that you amortize, resulting in an amort expense year over year and subsequent amortization of the deferred financing fee asset.

 

You are an idiotic first year analyst. I'm not talking about financing fees dpsht. I'm talking about the value of a company based on a drug currently in development that won't be approved for sale in the target market for a long time, and that has a finite patent life. I bet you're the tough guy in the CNN comment section too. Now move along and go get sh*t on by everyone in your department first year analyst.

 

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