How is the amortization of goodwill treated for income tax purposes? How does the amortization of goodwill affect deferred income taxes?
What will be an ideal response?
In a business combination, goodwill is tested annually for impairment for financial statement purposes. The Internal Revenue Code allows the deduction of goodwill and other purchased intangibles over a 15-year period. Because the taxable income and financial income differ, the presence of goodwill causes a temporary difference that necessitates the recognition of deferred income taxes.
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The calculation of free cash flow could include all of the following except
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