Grossing up intangibles

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Grossing up intangibles

Postby Dadoyan » Thu Feb 13, 2014 9:25 am

Hi,

I couldn't figure out why firms gross up the value of intangibles in the year of acquisition. Does anyone have a clear explanation about that ?
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Re: Grossing up intangibles

Postby victoredwards » Thu Feb 27, 2014 11:57 am

The net present value of income tax savings resulting from the amount of intangible assets. Amortisation of assets decreases the net taxable income and thereby the corporate income tax to be paid as cash. That's why the firms gross up the value of intangibles in the year of acquisition.
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Re: Grossing up intangibles

Postby Dadoyan » Mon Mar 03, 2014 6:50 am

But amortization of intangibles is not tax deductable. Consequently, your argument doesn' t work.
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