Write-Up
 |
Definition of 'Write-Up'An increase made to the book value of an asset, because its carrying value is less than fair market value. A write-up generally occurs if a company is being acquired and its assets and liabilities are restated to fair market value, under the purchase method of M&A accounting. It may also occur if the initial value of the asset was not recorded properly, or if an earlier write-down in its value was too large. An asset write-up is the opposite of a write-down and both are non-cash items. |
|
Investopedia explains 'Write-Up'For example, assume Company A is acquiring Company B for $100 million, at which point the book value of Company B's net assets was $60 million. Before the acquisition can be completed, Company B's assets and liabilities have to be marked-to-market to determine their fair market value (FMV).If the FMV of Company B's assets is determined to be $85 million, the increase in their book value of $25 million represents a write-up. The difference of $15 million between the FMV of Company B's assets and the purchase price of $100 million, is booked as goodwill on Company A's balance sheet. |
Related Definitions
Articles Of Interest
-
What Are A Stock's "Fundamentals"?
The investing world loves to talk about fundamentals, but do you know what it means? -
The Merger - What To Do When Companies Converge
Learn how to invest in companies before, during and after they join together. -
Can You Count On Goodwill?
Carefully examine goodwill and its sources before considering the value of your investment. -
Mergers And Acquisitions: Understanding Takeovers
In the dramatic world of M&As, battleground terms meld with bizarre metaphors to form the language of the game. -
Mergers & Acquisitions: An Avenue For Profitable Trades
When major corporate transactions have a big impact on the currency markets, you can benefit. -
Trade Takeover Stocks With Merger Arbitrage
This high-risk strategy attempts to profit from price discrepancies that arise during acquisitions. -
Depreciation: Straight-Line Vs. Double-Declining Methods
Appreciate the different methods used to describe how book value is "used up". -
Financial Statement: Extraordinary Vs. Nonrecurring Items
When it comes to analyzing a company, successful analysts spend considerable time differentiating between accounting items that are likely to recur going forward from those that most likely will ... -
Get A Career In Showbiz Accounting
An accounting career doesn't have to be boring. If you love numbers, but want excitement as well, consider the field of showbiz accounting. -
Warding Off Hostile Takeovers
The purpose of this article is to provide a general overview of hostile corporate takeovers, while highlighting a general course of action against such activity. This article provides basic ...
