Assignment Ch. 1 Textbook Exercises you will find the next information: E1-2 Multiple-Choice Questions on Recording Business Combinations [AICPA Adapted] Select the correct answer for each of the following questions. 1. Goodwill represents the excess of the sum of the consideration given over the: 2. In a business combination, costs of registering equity securities to be issued by the acquiring company are a(n): 3. Which of the following is the appropriate basis
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Facts: On February 1 2009 Allfoods Corp. Announced that it was acquiring 80% of the outstanding common stock of Baked Beans Corp. On August 1 2009, the acquisition day, Allfoods paid 40 million in cash and issued 2 million shares of Allfoods to sellers. All the outstanding stock options granted to employees of Baked Beans will be replaced with Allfoods stock options. Allfoods share price was 30 on announcement date and 35 on acquisition date. Allfoods would issue an additional one million shares
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combination Intangible asset acquired in a business combination Subsequent expenditure on an acquired in-process research and development project 33 35 42 Acquisition by way of a government grant 44 Exchanges of assets 45 Internally generated goodwill 48 Internally generated intangible assets 51 Research phase Development phase Cost of an internally generated intangible asset 54 57 65 RECOGNITION OF AN EXPENSE 68 Past expenses not to be recognised as an asset 71 MEASUREMENT AFTER RECOGNITION
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) 16,000 1/2/2010 Patient purchased (10-year life) 84,000 3/1/2010 cost of developing a secret formula (indefinite life) 75,000 4/1/2010 Goodwill purchased (indefinite life) 278,400 6/1/2010 Legal fee for successful defense of patent purchased above 12,650 9/1/2010 Research and development costs 160,000 Prepare
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related to the nature of business acquired; in this case video stores. 2. What would be the impact on Blockbuster's 1988 earnings per share if 5-year amortization were applied to this goodwill? The application of a 5-year amortization timetable impacts the amounts that would have to be recognized as the goodwill, which would decrease Blockbuster’s net income and hence their 1988 earnings per share. 3. What would have been the effect on earnings per share if Video Superstore purchases were
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License Cost (80 x 600 x 2/3) P 32,000 Less accumulated amortization (32,000/4) 8,000 24,000 Trademark Cost (80 x 600 x 1/3) P 16,000 Less accumulated amortization (16,000/4) 4,000 12,000 Goodwill (12M – 8M) 4,000,000 Total intangible assets P4,172,500 6-3 (July, Inc.) |2001 | | | | |Jan
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Accounting Standard Board (IASB)." (Uzma, 2001 pg. 28-38) Intangible assets are considered to be corporate intellectual property which includes patents, copyrights, trademarks, trade names, franchise licenses, government licenses and goodwill. The main characteristics of intangible assets are that they are not of physical existence and they are not monetary instruments, but they are classified as long-term assets and provide long-term benefits. Intangible assets are presented in the balance
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Week 2 Solutions to Assigned Problems & cases for class discussion and take-up Case 3-3: Pool Inc. and Spartin Ltd. Objectives of the Case This case is intended to illustrate some of the different ways in which a business combination can be effected, and the fact that the form of the combination does not affect the substance of the transaction. The financial reporting for the transaction should follow the substance rather than the form. Analysis of Alternatives Prior to the combination
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were bad ideas to begin with. Also, in the balance sheet, various accounts in the total current assets category show a great amount of investment between 2000 and 2004. However, looking at the drastic increase in the “reacquired franchise rights, goodwill, other intangibles” account would indicate that the aggressiveness of investing and creating assets are not working out in Krispy Kreme’s favor. As the amount of current assets increases, the reacquired franchises account increases, indicating bad
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Intangible assets are assets (not including financial assets) that lack physical substance. B. Goodwill is the excess of the cost of an acquired entity over the net of the amounts assigned to assets acquired and liabilities assumed. The amount recognized as goodwill includes acquired intangible assets that do not meet the criteria in Topic 805 for recognition as an asset apart from goodwill. C. Research is planned search or critical investigation aimed at discovery of new knowledge with
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