Asset write-up & write-down

LazEvr's picture
Rank: Chimp | 14

I understand assets get written up/down because the book value differs from the fair market value, but why does this happen in an M&A or an LBO?

Is it because values of assets must be re-assessed and marked-to-market in a transaction, hence a write-up/down?

Thanks in advance.

Comments (3)

Sep 9, 2011

Google "Business Combinations Accounting" and/or "Purchase Accounting" if you want the nitty-gritty details. In its most simple form, the assets and liabilities get re-stated to fair value in an acquisition (any excess gets allocated to Goodwill).

Sep 9, 2011