Incremental D&A in M&A

This problem tests whether you understand purchase accounting and how an acquirer resets the target’s balance sheet to fair value in a deal. In particular, it focuses on the link between asset write-ups, especially for property, plant and equipment and intangible assets, and the resulting non cash expense that flows through the income statement. Interviewers ask this because accretion and dilution analysis depends on correctly forecasting how the transaction changes earnings, expenses, and EPS, not just the purchase price and financing mix. A strong answer shows you can connect balance sheet adjustments to income statement effects and explain why those accounting changes matter in M&A modeling.