Memo
On January 1,2012 Altman acquired 80% of Bradford. During the valuation * An intangible asset was identified for £25,000 related to trademark. The Company determined it had a five year life. * Land (part of property & plant ) was undervalued by £2,300,000 * The long-term debt is denominated in EUR and is due € 2.4 M on 12/31/2013 and € 2.4 M on 12/31/2015 * All other assets were determined to be carried at fair value.
These new evaluation of assets and liabilities refers to identification of Goodwill. As we know Goodwill is an intangible asset that arises as a result of the acquisition of one company by another for a premium value. In our case Goodwill is $ 4 975 000 ( Cost of Bradford Asset).
The second step of our calculations was identification of the functional currency for each entity included in the financial statements of the reporting entity. An entity’s functional currency might be the currency of the country in which the entity is located (the local currency or LC), the reporting currency of the entity’s parent or the currency of another country. According to the given information the functional and reporting currency of Altman is the USD , the functional currency of Bradford is the GBP.
Once the functional currency of an entity is identified, the account balances of each entity that are not denominated in the entity’s functional currency should then be ―remeasured‖ into its functional currency by applying ASC 830’s requirements of accounting for foreign currency transactions. Remeasurement in Bradford trial balance sheet these transactions may be (1) purchases or sales of goods or services where prices are stated in a foreign currency or (2) loans payable or receivable in a foreign currency, among others . After the remeasurement process is complete and the entity’s financial statements are stated in its