Cisco Case Study

724 Words Jun 16th, 2015 3 Pages
Cisco Case Study

D. i. How did Cisco determine the allocation of the purchase price to specific tangible and intangible assets? (see business combinations in the summary of significant accounting policies in note 2.)

Cisco allocates the fair value of the purchase consideration of its acquisitions to the tangible assets, liabilities, and intangible assets acquired. The excess fair value of the purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill.

ii. What percentage of the total (gross) assets acquired in the NDS acquisition (excluding liabilities assumed) are comprised of goodwill and other intangibles?

Cash and cash equivalents 98,000,000 A/R 199,000,000
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1. What percentage of total assets consists of purchased intangible assets, net, at July 27th, 2013? At July 28th, 2013? What type of events triggered the existence of these intangible assets?

July 27th, 2013 – in tangible assets make up 3.36% of total assets

July 28th, 2012 – intangible assets make up 2.13% of total assets

The reason 2013 intangible assets make up more of the total assets compared to 2013 intangible assets is due to the NDS acquisition that occurred in 2013

ii. Cisco’s purchased intangibles fall into one of two categories – those with finite lives and those with indefinite lives. Describe in your own works what these categories mean. How does the accounting for intangibles differ across these two types of intangible asset categories. A finite life is when an intangible asset has a limited existence. It can be worn out or used up after a certain period of time. An intangible that has a finite useful life is amortized over that useful life. The amortized amount is recorded as a cost

An indefinite life is when an intangible asset can exist indefinitely. The asset will last forever, it cannot be worn out or used up. An intangible that has a indefinite life cannot be amortized; however, periodically needs to be evaluated to see if the asset has been impaired.

There is an accounting difference between intangibles with a finite and indefinite life. Intangibles

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