Volume 2, No. 5

 

How Acquisitions Can Become One-Time Charges:  Purchase accounting treatments often yield goodwill - and the associated amortization can hamper earnings comparisons for years. Acquiring companies that have little in the way of tangible assets can impose plenty of goodwill on the acquiror, unless the merging businesses are heavily involved in research and development. Because of a GAAP requirement, these kinds of companies expense acquired research and development efforts - which frequently are a significant portion of the entire acquisition.

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