Any goodwill forthcoming from the merger or acquisition is examined and appraised under SFAR 142, in regards to its fair value. The whole context was aimed at adding more items to what constitutes a business when the acquisition or a merger is undertaken. The acquisition method is still followed as before, but more items are included here as well as different ways of ascertaining the fair value of assets and liabilities, which are acquired. The SFAR 141 principle of measuring goodwill requires the full goodwill approach reporting by the acquiring firm. This is explained as full measure i.e. 100% of both identifiable assets and liabilities and any non-controlling interest in the acquired firm, to be reported by the acquiring firm. Inadvertently, goodwill still stands as the salvage of the fair value of the business consideration exchange during the acquisition or merger, over the fair value of the assets acquired and liabilities undertaken. Goodwill is thus spread over both the controlling and non-controlling interests by the acquiring firm in the new rule. The rules under the new section of SFAR 141 require that companies should report retrospectively. This means that the acquiring company has to recast prior business periods to reflect the correct valuations in their books. Under the new rules, bargain purchase i.e. any occurrence of negative goodwill needs to be counterchecked before any entries are made. Previously, this negative goodwill was spread over the noncurrent assets, but the rule now states that it should be recognized as a gain over how much the fair value of assets and liabilities exceed the consideration exchange, and not as an extraordinary item. The consideration exchange during any combination is recognized on the acquisition date and not on the transaction announcement date, under the new rule. Any acquisition related costs e.g. legal fees, consultancy fees et cetera, are not included in the purchase price as the previous case. The items to be included here are cash, stock, contingent payments e.g. earn outs, and any assets transferred and liabilities assumed. Acquisition costs are expensed as they are incurred. Contingent liabilities are recorded at their fair values. This is determined on the acquisition date as the higher of the fair value amount or that amount determined under the existing guidance for nonacquired contingencies. This is unlike the old method that added the contingent considerations to the goodwill. When the valuation is made i.e. market to market to determine the fair value and subsequently paid in cash, the reporting is done in the income statement (Eric, 2008). Any in-process research and development (IPR&D) is capitalized at fair value as an intangible asset until completion or abandonment. This is irregardless to the previous rule that only recognized items that were reported in the balance sheet. These IPR&D are then written off if there is no future value for them by the acquirer on combination. However, on continued use, abandonment calls for a write off in the acquirer’s book and an amortization of the assets over the expected useful lives on completion of the project. Any other assets that are acquired with no intentions of using them i.e. defensive items are reported at the fair value by the acquiring firm. Valuation allowances are reported, in the new rule, on any assets acquired
Valuation under SFAR 141 Name: Institution: Instructor: Subject: Date: Valuation under SFAR 141 and its impacts on the acquiring firm’s books Any valuation under the section SFAR 141 is an evaluation of the fair value of assets and any liabilities which are forth acquired during a business combination…
The organization was founded in the year 1960.The oil production of these countries accounts to almost one third of the aggregate global oil production. This mammoth production is equivalent to 75% of the total known oil reserves.1 The price mechanism of the international oil prices is largely influenced by the OPEC countries with the practice of negotiation among the member nations by setting export quotas for themselves.
Carnival Cruise Lines (CCL) is the largest vacation company in the world. The company was founded in 1974 with headquarter in Miami at Florida. It has more than 80 cruise liners and catering to the more than 7 million passengers worldwide. The company has revenue from vacation tickets, bars, gambling games and many more.
Redbox is an American company that has its scope of business in the rental of DVDs, Blu-Ray Discs, and also video games using fully automated retail kiosks. Redbox possessed over 33,000 kiosks in over 27,800 locations. Redbox, as a subsidiary of Coinstar Inc., constituted 34.5% market share of discs rented, as of the second quarter 2011.
The literature illustrates frequent uses of terms such as knowledge capital, intellectual capital, and knowledge assets, being often used interchangeably in discussions of intellectual property, which in turn may be used synonymously with intangible assets (Contractor, 2001; Daum, 2003 ).
The problems faced by the country include both economical and human rights abuses. Zimbabwe was also characterized by high rate of unemployment and poverty. All these factors took the country into a very bad economical
As per Coinstar Inc.’s Annual Report for the year 2010, the company increased its ownership proportion of Redbox from 51% to 100%.
a. General Economic Influence: At a time when a sluggish and struggling economy
It affects any company that follows the generally accepted accounting standards (GAAP) in its financial statements, which is contemplating an acquisition or a merger, or has done so in the recent past (Alfred, 2006). Any goodwill
1 Based on the area and population of the State, the population density of the state is assumed to be around 412 people per square mile and is ranked as the seventh largest population density in the US. Based on the