Questions 1. Intangible assets; concepts‚ definitions; items comprising intangible assets. 1‚ 2‚ 3‚ 4‚ 5‚ 6‚ 7‚ 8‚ 9‚ 10‚ 11‚ 12‚ 13‚ 14 2. Patents; franchise; organization costs; trade name. 9‚ 10‚ 13‚ 14‚ 25 3. Goodwill. 4. 5. Brief Exercises Exercises Concepts Problems for Analysis 1‚ 2‚ 3‚ 5‚ 6 1‚ 2‚ 3‚ 4 1‚ 2‚ 3 1‚ 2‚ 3‚ 4‚ 5‚ 7‚ 12‚ 13 4‚ 5‚ 6‚ 7‚ 8‚ 9‚ 10‚ 11‚ 13 1‚ 2‚ 3‚ 4‚ 6 1‚ 2 12‚ 13‚ 14‚ 18 6‚ 8 6‚ 12
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addresses Goodwill is 350-20 and the codification that addresses the other intangible assets is 350-30. To continue‚ according to codification 350-20-20 goodwill is‚ “an asset representing the future economic benefits arising from other assets acquired in a business combination or an acquisition by a not-for-profit entity that are not individually identified and separately recognized”. In addition‚ according to codification 350-20-35-1‚ “Goodwill shall not be amortized. Instead‚ goodwill shall be
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testing‚ goodwill associated with the Spanish operations impairs under GAAP as of 12/31/2010. The impairment loss is $200‚000. Under U.S.GAAP‚ goodwill impairment test is taken annually‚ or when there is impairment indicator. B. After the impairment testing‚ goodwill associated with the Spanish operations impairs under IFRSs as of 12/31/2012. The impairment loss is $400‚000. The new carrying value of the assets is $3.1 million. The new carrying value of the CGU is $1.8 million. Goodwill acquired
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accounting treatment of goodwill impairment/ detailed two-step impairment test – apart from qualitative assessment (1) if CV of reporting unit is > than FV of reporting unit‚ take step 2; if opposite‚ stop. (2) compare CV of goodwill w/ FV of goodwill; if CV is > FV‚ there might be potential impairment. CH4 -Determine the fair value of sub/the fair value of NCI – FV allocation; FV of sub = FV of CI + FV of NCI; go by mkt price if there is; use parent if there isnt -Determine goodwill using fair value
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ANSWERS TO QUESTIONS Q4-1 The carrying value of the investment is reduced under equity method reporting when (a) a dividend is received from the investee‚ (b) a differential is amortized‚ (c) an impairment of goodwill occurs‚ and (d) the market value of the investment declines and is less than the carrying value and it is concluded the decline is other than temporary. Q4-2 A differential occurs when an investor pays more than
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ACCT 4022 – Advanced Accounting Notes Chapter 1: Intercorporate Acquisitions and Investments in Other Entities The Development of Complex Business Structures By expanding into new markets or acquiring other companies already in those markets‚ companies can develop new earnings potential and those in cyclical industries can add greater stability to earnings through diversification. A subsidiary is a corporation that is controlled by another corporation‚ referred to as a parent company. Control
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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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