In 1997, the General Director of WorldCom successfully bid to acquire MCI Communications. Key issues that have not yet been resolved, how to structure the transaction for tax purposes, and what impact the acquisition will have on reported earnings of the combined company. The Director-General knew that tax and accounting structures MCI acquisition could have serious consequences for the future financial performance of the combined company. He also knew that part of his sentence (80% cash, 20%) for MCI will affect both. In 80% of the supply of money WorldCom, in purchase accounting was the only option the financial statements. When you purchase accounting, net asset goals were recorded in their fair value, and the unallocated purchase price was assigned to goodwill. However, the amount of goodwill generated in the operation depends on the tax structure of acquisition. Creation of a new liability on the books goal reduced net asset value, resulting in a good faith. This case analyzes, and shows an example of how the tax structure of the transaction may affect the tax consequences and financial records for the acquisition. The amount of tax commitments, tax implications and financial records for the acquisition. The amount of tax liabilities assumed and goodwill all depends on the tax structure of the transaction. "Hide
by Mary E. Burt, Fraser Preston Source: Stanford Graduate School of Business 13 pages. Publication Date: November 1, 2001. Prod. #: A180-PDF-ENG
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