FASB 160 (NonControlling Interests in Consolidated Financial Statements) are as follows: a. to improve the relevance‚ comparibility‚ and transparency of financial information related to business combinations. b. to eliminate the amortization of Goodwill. c. to facilitate the convergence project of the FASB and the International Accounting Standards Board. d. a and b only 5. A business combination in which the boards of directors of the potential combining companies negotiate mutually agreeable
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Learning Exercise 7: Impairment of PP&E; Intangible Assets; & Goodwill (25 points) (Solutions) Problem 1 Bateman Company purchased a convenience store building on January 1‚ 2007‚ for a 6‚500‚000. The building has been depreciated using the straight-line method with a 20-year useful life and 5% residual value. As of January 1‚ 2013‚ Bateman has converted the building into an Internet Learning Center where classes on Internet usage will be conducted six days a week. Because of the change in the
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Tiny has been having financial troubles and recently filed for Chapter 11 bankruptcy protection. Fuzzy is interested in Tiny’s manufacturing facility‚ location and capabilities. Tiny’s manufacturing equipment is operational; they don’t have any goodwill‚ but have some intangible assets. Since‚ Fuzzy is holding so much cash they decided to buy Tiny’s and are in the final stages of the transaction. The Company is not certain in how to use Tiny’s facilities. They will either: a. continue to use the
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Rewards Network Inc. (11-14-2002): The company classifies franchise rights to goodwill. Because according to SFAS Nos. 141‚ which indicates that intangible assets not specifically identified and inseparable from the business as a whole (SFAS 141). Most of its business combination is reacquiring franchising rights. In 2002‚ the company decides that reacquired franchise rights can no long be separable from goodwill by the new standard. The rights are not amortized (SEC Government‚ 2002‚ para 7)
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incurred in the formation of a corporation. 8. Operating losses incurred in the start-up of a business. 9. Training costs incurred in start-up of new operation. 10. Purchase cost of a franchise. 11. Goodwill generated internally. 12. Cost of testing in search for product alternatives. 13. Goodwill acquired in the purchase of a business. 14. Cost of developing a patent. 15. Cost of purchasing a patent from an inventor. 16. Legal costs incurred in securing a patent. 17. Unrecovered costs of a
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CHAPTER 1 INTERCORPORATE ACQUISITIONS AND INVESTMENTS IN OTHER ENTITIES ANSWERS TO QUESTIONS Q1-1 Complex organizational structures often result when companies do business in a complex business environment. New subsidiaries or other entities may be formed for purposes such as extending operations into foreign countries‚ seeking to protect existing assets from risks associated with entry into new product lines‚ separating activities that fall under regulatory controls‚ and reducing taxes
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Case 10-2 Eagle Impairment Case Question #1 Under IFRS’ International Account Standard No.36^15 an asset must be assessed for indicators of impairment at the end of each reporting period. The information provided for the commercial building in Italy does not say whether there are is an event or change in circumstances that indicate that book value of the asset may not be recoverable. Since there is no indicator mentioned‚ one possibility would be that no investigation of impairment take place and
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842 2‚765 Instructions A) What kind of intangible assets might a health care products company have? Does the composition of these intangibles matter to investors-that is‚ would it be perceived differently if all of Merck’s intangibles were goodwill‚ than if all of its intangibles were patents? A health care company is a business enterprise with tangible assets such as land‚ land improvements‚ buildings‚ and equipment. It also has many intangible assets. Some of the most important intangibles
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RE: Sony’s Goodwill and Segment Reporting Facts: Sony have been known worldwide as a Japanese multinational company‚ its efforts trying to expanding business in United States‚ have made that Sony acquires CBS Records and Columbia Pictures. Thus‚ creating Sony Music and Sony Pictures‚ which represent Sony entertainment. This involved to the company in $1.2 billion of debt‚ and assigned goodwill assets for $3.8 billion. The last filing with SEC reported just two main segments: electronics and
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company located in Spain‚ and the acquisition resulted in goodwill being recorded. Assume that (1) the activities in Spain represent the lowest level at which internal management monitors goodwill and (2) the Spanish operations represent CGU under IFRS and reporting unit under U.S. GAAP. At the end of 2009 under GAAP and IFRS the recoverable amount of the asset including goodwill exceeded its carrying amount‚ suggesting that the goodwill allocated to the Spanish operations was impaired. At the end
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