In July 2017, PayPal Holdings, Inc. acquired Canadian payment-processing company TIO Networks for $238 million. A few months later, in November 2017, PayPal said it suspended TIO’s operations to protect customers after discovering “security vulnerabilities on the TIO platform and issues with TIO’s data security program that do not adhere to PayPal’s information security standards.” Following suspension of TIO operations, PayPal wrote-off $30 million of customer-related intangible assets. So, if TIO business is now worthless, why did PayPal write-off only $30 million and not the entire value of the acquisition?
Audit Analytics answers this question and explores the topic of acquisition accounting in this article.