00:01
The goodwill represents the difference between the proposed purchase price and the total fair market value of the assets.
00:07
The goodwill will be amortized on a straight line basis.
00:14
Form 8594 needs to be filed with the tax return.
00:19
So let's go over what this means.
00:22
Straight line immortization is the easiest way to account for discounts or premiums on bonds.
00:30
Under the straight line method, the premium or discount on the, the bond is amortizing equal amounts over the life of the bond.
00:40
So basically, you can see that with straight line discount amortization, we're subtracting a certain amount every single time, and then we're going to end up with a straight line equation.
01:07
So if we were to graph time and carrying amount, you'd see that we would get a straight line like that.
01:27
Amortization of the discount is added on to the cash amount.
01:31
Well, that's why you see, if we have 8 ,000 cash interest, then amortization is 1 ,000.
01:41
Then we have to add that to the 8 ,000, and then we end up getting 9 ,000 total interest expense.
01:59
And you see that this is over the course of 10 years.
02:10
And how they got the annual amortization amount would be 10 ,000, which is a discount on the bonds, divided by the 10 -year life of the bond.
02:23
So that is 1 ,000 per year.
02:25
So that's why we have that carrying amount.
02:27
We're carrying over this amount...