Loss of goodwill in M&A forever
The depreciation on goodwill is always an essential element in calculating post-tax return of an acquisition proposal and would severely impact payback calculations of every M&A deal, and the corresponding negotiations in the bid or offer price for an asset Saumil Shah February 05, 2021 / 05:16 PM IST
The Finance Bill 2021 has proposed that the goodwill of a business or profession will not be considered as a depreciable asset, and, accordingly, depreciation would not be allowed on goodwill of a business or profession in any situation.
It is well established in the financial world that goodwill is an asset that arises on account of consideration paid being in excess of fair value of assets and liabilities being acquired, irrespective of the fact whether consideration is discharged in cash or shares. The mode of acquisition of a business may be via a merger, demerger or business purchase.
Cinemas may be open, but PVR’s Q3 shows good content is badly needed
The multiplex sector has been among the worst hit due to the covid-19 pandemic, with operations remaining closed relatively longer than other sectors.
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Cinemas were allowed to resume operations from mid-October with 50% capacity. But PVR Ltd’s third quarter results show that this has barely moved the needle for the firm.
For the December quarter, consolidated revenues for the company declined by 95% vis-à-vis last year’s corresponding quarter to ₹45 crore. This is similar to the show in the September quarter, when revenues had declined 95.8%. Analysts at Motilal Oswal Financial Services Ltd estimate that even though cinemas opened with permissions for 50% occupancy, actual occupancy levels were only around 1% in Q3. Blame it on poor content. In a classic chicken-and-egg situation, producers are waiting for occupancy levels to rise before releasing movies in the