Question
On February 9, 1996, Walt Disney Co. acquired Capital Cities/ ABC Inc. for $10.1 billion in cash and 155 million shares of Disney valued at
On February 9, 1996, Walt Disney Co. acquired Capital Cities/ ABC Inc. for $10.1 billion in cash and 155 million shares of Disney valued at $8.8 billion, based on the stock price at the date the transaction was announced. Disney estimated that goodwill under the acquisitions would amount to $19 billion. What forecasts does Disneys management have to make to record amortization of this goodwill? What actors would underlie these forecasts? As a financial analyst, what questions would you raise with the firms CFO about the amortization of goodwill?
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