Deductibility of the Goodwill Recorded on the Negative Net Equity of the Target Company

Abstract

This article aims to present the legal and accounting arguments that uphold the deductibility of the goodwill recorded on the negative net equity of the target company. Unlike other papers that have addressed the topic, the reason to deduct it, in our view, is that the price paid by the acquirer is not limited to the amount paid in cash but also includes the liabilities that he is responsible for paying after the event of a merger, spin-off, or acquisition.