FASB ASC 805-25-23: Financial Case Study

For calculations of the acquisition price, the P/E is taken to be 8.6. The acquisition price is calculated by multiplying this value with the historical average of net income. Thus, the acquisition price comes out to be $186,215,800, which is $189,186,673 less than the enterprise value.

indirect costs associated with obtaining a customer may be deferred and amortized over the revenue stream associated with that contract.” So instead of recognizing these expenses immediately, the portion of the unused capacity was able to be expensed later when the revenue was realized. This might have been an O.K. practice in accordance of GAAP if the capitalization of these line costs

As an amusement park operator, it is clear to assume that WAL’s intention of acquiring the wound-up company’s assets was to move and operate them at the new location. Therefore, transportation cost ($350,000) and the other costs to get them up and running ($400,000 and $500,000) should be capitalized as part of acquired asset ($4.25 million). By the lower of cost or market valuation system rule, $4.25 million will be recorded for the purchase price. In addition, 0.60 million valuation difference needs to be accounted for using appropriate ASPE recommendations. This capitalization approach will lead to the same effects as the above two approaches toward stakeholders.

835-20-30-2   The amount of interest cost to be capitalized for qualifying assets is intended to be that portion of the interest cost incurred during the assets ' acquisition periods

* Under ASC 805-740, a change in an acquirer’s valuation allowance for a deferred tax asset that results from a change in the acquirer’s circumstances caused by a business combination…

NaviNow will pay $8 million to the four former owners of TrafficEye if revenues from the combined system exceed $100 million over the next 3 years. NaviNow estimates this contingent payment to have a probability adjusted present value of $4million. According to down said formula (http://www.ey.com/Global/assets.nsf/United%20Accounting/ATG_FRD_BB1616/$file/ATG_FRD_BB1616.pdf)

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.)

Overall. The FASB Codification Topic 320: Investments-Debt and Equity Securities is included under the financial statement asset section and offers guidance on investment instruments that represent either a creditor relationship (debt) or an ownership interest (equity) and provides standards for reporting such investments according to generally accepted accounting principles (GAAP) (FASB ASC 320-10-05-2, 2016).

Refer to SFAS 146 (June 2002 "Accounting for Costs Associated with Exit or Disposal Activities");

Question 1 Several factors have been proposed as providing a rationale for mergers. Among the more prominent ones are (1) tax considerations, (2) diversification, (3)

There may be differences between the assigned values and the tax bases of the assets and liabilities recognized in a business combination accounted for as a purchase under APB Opinion No. 16, Business Combinations.

Reporting subscriber acquisition costs as an asset rather than an expense is "aggressive" (as opposed to "conservative"). As noted above, capitalizing costs as

Analysts estimate that the $80 million in cost saving could be realized after the acquisition , however certain other costs associated with the integration approximately $130 million would occur .Hence, I take these cost savings and integration costs into consideration for the with-synergies valuation. Incorporating the effects of 80million cost savings for the merged firm (to be achieved by end of 2007 and assumed to incur in perpetuity then on) and 130 million integration costs (half of this accounted at the beginning years) in the estimated EBITs for Torrington, a new horizon value is estimated, the new FCF is discounted by acquiring company’s WACC 8.39%. Torrington company’s with- synergies valuation $1386.38 million exceeds the value as a stand-alone entity by approximately $286 million. sheet2: With-synergies Valuation of Torrington-DCF Method.

Property, Plant & Equipment (PPE) (AASB 116): “Property, plant and equipment are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item including borrowing costs that are related to the

Further assume that none of these acquisitions will affect the acquirer’s equity cost of capital.