136B Notes 1_11_11

136B Notes 1_11_11 - *Goodwill can only be recorded if a...

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136B Notes: 1/11/11 Problem 12-2 (From Handout in Class) a: Costs to obtain, 1/00 62,050 Amort., 6/30/00-12/31/00 -1,825 (62,050/17) x 6/12 CV, 12/31/00 60,225 b: CV, 1/1/01 60,225 2001 Amort. -3,650 Amort, 1/1/02-11/30/02 (3,650 x 11/12) -3,346 Legal fees (12/1/02) (successful defense) 35,700 88,929 Amort, 12/1/02-12/31/02 X months: (88,929/ 179months) 17yr*12 mos 204 mos. Approx. 508/month -508 (-)Mos amor. Taken 2003 Amortization (6+12+11) 29 months (508 x 12) -6,096 175 2004 Amortization -6,096 CV, 12/31/04 76,229 c: CV 1/1/05 76,229 2005 Amort -15,246 2006 Amort -15,246 *When you have not 2007 Amort -15,246 been able to successfully CV 12/31/07 30,491 defend your patents, etc. might be an impairment. (didn't win legal suits, etc) Goodwill *Not specifically identifiable, can't be seperated from the business. *Relates to superior management, service reputation, name recognition *Costs incurred to develop and/or maintain goodwill must be expensed
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Unformatted text preview: *Goodwill can only be recorded if a compay goes out and buys another company and pays some excess amount for it >>Only record GW when an entire entity is purchased GW = Purchase price for the entity - FMV of the entity's net identifiable assets Example: Co. A acquired Co. B for $3,000,000 cash. Co. A had net identifiable assets with a FMV of $4,500,000, and liabilities of $2,100,000. Co. A's J/E Identifiable Assets 4,500,000 Goodwill (plug) 600,000 Liabilties 2,100,000 Cash 3,000,000 Impairment of Intangibles 1) Specifically identifiable intangibles with definite lives: *Amortize *Test for impairment when indicated by circumstances 2) Specifically identifiable intangibles with indefinite lives: *Don’t amortize *Test for impairment annually 3) Goodwill *Same as #2 above, but the impairment calculations are different...
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136B Notes 1_11_11 - *Goodwill can only be recorded if a...

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