In an acquisition you calculate the pro forma goodwill as Eqty Purchase Price - BV of Equity - Write-ups + DTL (from write up) + Existing Goodwill
The new goodwill represents the new excess purchase price, but then I'm confused why do we have to add the old goodwill? Confused about that.
E.g. if we purchase a company for 2000, it's current BV of Eqty is 1500, and current GW is 1000 and let's assume no write ups. It makes more sense to me that the new goodwill should just be 1500 (Purchase price - BVE) but why do we have to add the existing GW?
bump also want to know
bump also interested
The old goodwill is automatically "written-off" and basically added back as part of the new goodwill. So the "new" goodwill created is really just 1500, but "formally" the goodwill created is 1500+1000
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