Deloitte FAS 141R-Acquisition Accounting

Goodwill (cont.)Tax Accounting for Component 2 Goodwill• A deferred tax asset is recognized for the excess of tax deductiblegoodwill over book goodwill• ASC 740-10-25-3(d) prohibits recording a deferred tax liability for theexcess of the book over tax goodwill when difference is acquiredIssue and Potential Risk• Historical books may have deferred tax liability or deferred tax assetrelated to a basis difference in goodwill• Any deferred taxes related to historical accounting for goodwill must beremoved and reset– Component 1 goodwill has no temporary difference on acquisition date– Component 2 goodwill may have a DTA for tax goodwill over book goodwill,but no DTL can existCopyright © 2012 Deloitte Development LLC. All rights reserved.16