M5 Acquisition part 2

Question 1

Full goodwill method

Answer 1

NCI = Fair value of subsidiary * NCI %

Question 2

Partial goodwill method

Answer 2

NCI = Fair value of subsidiary’s net identifiable assets * NCI %

Question 3

In BIG, I is identifiable intangible assets. e.g. rights, permits, patents, copyrights, trademarks, franchises, computer software and licenses, etc. What do you list separately from goodwill?

Answer 3

In process R&D. which is recognized separately from Goodwill.

Question 4

Private companies can elect to not separately recognize intangible assets. So all put into goodwill. Also goodwill must be amortized over how many years

Answer 4

intangible assets that would otherwise rise from noncompete agreements, customer related intangible assets. The goodwill must be amortized over 10 years. (max)

Question 5

Partial Goodwill = just for Noncontrlling interest and Goodwill. Formula is..

Answer 5

NCI = you only take non-owned % times the FV (Net identifiable assets, not the whole purchase price).

Goodwill = Parent paid price - (percentage of FV of subsidiary)

Question 6

Full goodwill formula is

Answer 6

Fair value of subsidiary - FV of subsidiary’s net assets

Question 7

Partial goodwill formula is

Answer 7

Acquisition cost - FV of subsidiary’s net assets acquired. (What you paid - (FV of net assets * % purchased)

Question 8

Measurement period adjustments cannot exceed _ year, adjustments are offset against the _ account. Adjustments to D&A are reported in the period adjustments are determined. ( restatement not required).

Answer 8

1 year, goodwill.

Changes in provisional, then balance with goodwill.