The intangible assets of a company getting acquired were written up for book purposes from a pre-deal book value of $50m to $60m but NOT for tax purposes, where the tax basis remained $50m. Assume that targets definite lived intangible assets are amortized on a straight-line basis over 15 years for both book and tax purposes. Also assume that the acquirer has a tax rate of 40%. What is the impact on goodwill as a result of the book write-up and no tax step up?

No impact on goodwill

Goodwill is lower by $6m

Goodwill is higher by $6m

Goodwill is higher by $4m