Goodwill, PPA

Question 1

What is Goodwill?

Answer 1

Goodwill is an intangible asset that arises when one company acquires another for a price higher than the fair value of its identifiable net assets

Question 2

Give me Goodwill Formula

Answer 2

Purchase Price - Book Equity

Question 3

What happens to Goodwill if Tangible Assets increase by 50m. Purchase price the same

Answer 3

Book Equity increases by 50

Goodwill decreases by 50

EV and Eqv staz the same, only PPA shifts
EQV= Net Assets + Goodwill (at deal close)

Question 4

What is the difference between Booke Equity and EQV?

Answer 4

• EQV is the price the buyer pays. Market value
• It stays constant bc buyer pays the same price
• Book Equity is what is recorded as net worth

Question 5

What is negative Goodwill?

Answer 5

Book Value > Acquisition Costs

Question 6

What is a negative impairment test?

Answer 6

o Negative impairment test: Goodwill < Bilanzwert

NGW indicates a discount purchase, often because the seller is in distress,