Fosters Case Study: Valuation and Impairment of Goodwill

Fosters Case
SCHOOL OF
ACCOUNTING
BAO2203
Corporate Accounting Assignment
Hao Cheng 3781727 Yang Siyu 3778363 Tutor: Ghazaleh Shokrollahi Thursday 10 a.m. – 11 a.m. 1
p.m. – 2 p.m.
Question 5:
Fosters, the beverage giant of Australia has been all over the news recently, as the company has
reported a huge loss and the stock price keeps falling. All of these problems might be brought by its
troublesome wine business. This report will try to explain why Fosters is under this infaust
circumstance by answering the eight following question.
Question 1: Why is an impairment test considered ... Show more content on Helpwriting.net ...
The most important influence comes from the hope of overtake or demerge, which requires the
company to have an impairment test.
Question 4: What assumptions need to be made when undertaking an impairment test, and what
effect would these have for evaluating the performance of Fosters and its competitors?
The first assumption need to be made when undertaking an impairment test is to make sure all assets
that may be impaired are included in the test. IAS 36 has a list of external and internal indicators of
impairment. If there is an indication that an asset should be impaired, the calculation of the asset's
recoverable amount should be done. [IAS 36.9]
The recoverable amounts of the following types of intangible assets should be measured annually
whether or not there is any indication that it may be impaired, which means all intangible assets in
Foster have to be included. An intangible asset with an indefinite useful life means: * an intangible
asset not yet available for use * goodwill acquired in a business combination (Patell and Wolfson,
20009)
If the company does not include all intangible assets, the impairment test for written down value
would be underestimated, resulting in the performance of Fosters being overestimated while the
performance of its competitors might be underestimated.
Second, the impairment test should be true and fair. If the company does not reflect true and fair
test, the test would be

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Amortization And Impairment Of Goodwill
Amortization Versus Impairment of Goodwill:
Impact on Accounting Quality, Financial Statements' Economic Value, Investors, and Auditors
Accounting Standards Codification (ASC) replaced all U.S. financial accounting standards in July
2009. Consequently, ASC 350, Intangibles – Goodwill and Other, replaced SFAS 142, Goodwill and
Other Intangible Assets in September 2011. Under ASC 350, goodwill must be periodically tested
for impairment. Goodwill impairment is determined through a two–step process outlined in ASC
350. However, in January 2014, an update to ASC 350 was released, which authorized an alternative
method of accounting for goodwill servicing private companies that could consequently reduce their
costs and simplify their accounting methods. Additionally, the international standard for goodwill
impairment, IFRS 3, specifically mandates that companies must annually test goodwill for
impairment. The specifics of the impairment test are entailed in IAS 36 Impairment of Assets, the
international standard for accounting for goodwill associated with business combinations. This
paper will analyze the effects of the accounting policies enacted under these standards and in
particular analyze the efficiency of impairment testing methods versus amortization of goodwill and
the connection of impairment methods with managerial and CEO compensation and earnings
management. Finally, this paper will analyze if impairment testing under ASC 350 and IAS 36 or
amortization, which is

The Fasb 's Agenda Of Accounting For Goodwill
Abstract.
This paper examines the FASB's agenda of accounting for goodwill in public and not–for–profit
entities. Research shows they are looking at four alternatives for accounting for goodwill in these
entities. There is no projected completion date as of March 2015. The adoption of this proposal does
not appear to help converge U.S. GAAP and IFRS.
Introduction.
INFO
Body.
Background:
"In 2001, FASB Statement No. 142 Goodwill and Other Intangible Assets replaced APB Opinion
No. 17 Intangible Assets (issued in 1970)" (Hillenmeyer & McMillen, 2013). The new statement
eliminated goodwill amortization which was previously amortized over its useful life at a maximum
of 40 years. Statement No. 142 required that goodwill be tested for ... Show more content on
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In 2013, the Board endorsed the Private Company Council decision to give private companies an
alternative to amortize goodwill and simplify the impairment test. After much feedback, there was
an indication that many public and not–for–profit (NFP) business entities share similar concerns of
cost and complexity on the annual goodwill impairment test. As a result, the Board added this
project to its agenda. The objective of this project is to reduce the cost and complexity of the
subsequent accounting for goodwill for public business entities and NFP entities. This project will
determine if certain intangible assets, such as customer relationships and non–compete agreements,
should be included in goodwill. Research will be done to identify the most appropriate useful life of
goodwill if it were to be amortized and on simplifying the impairment test (Hillenmeyer &
McMillen, 2013).
Examples of Previous Method: Like other public companies, Coca–Cola and Macy's have the option
of performing a qualitative assessment of goodwill before completing the quantitative two–step
process described in FASB Statement No. 142. Coca–Cola and Macy's both test intangible assets
that have indefinite useful lives, such as goodwill, annually for impairment or more frequently if
economic events

The Valuation And Impairment Of Goodwill
This paper aims to clarify the Financial Accounting Standards Board (FASB) accounting standards
regarding the valuation and impairment of goodwill; therefore, the primary source used is the FASB
website. The focus of this paper will be on the valuation of goodwill in business combinations and
the impairment of goodwill. This paper will not discuss the valuation of goodwill in an acquisition
by a not–for–profit entity. The paper will first define key terms required for understanding FASB
standards of the valuation and impairment of goodwill. The paper will continue on to outline
International Generally Accepted Accounting Principles (IGAAP) regarding the valuation and
impairment of goodwill. This paper will illustrate the history of the ... Show more content on
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Goodwill is a type of intangible asset which is measured when an entire company is purchased
(TEXT pg658). "Conceptually, goodwill represents the future economic benefits arising from the
other assets acquired in a business combination that are not individually identified and separately
recognized" (TEXT pg659). Goodwill is not measured internally because the valuation is difficult
and near to impossible to pair with the costs of creating it (TEXT pg659).
Consideration Transferred – Consideration transferred is the amount paid by the acquirer to the
previous owners to purchase the business. It is measured at acquisition date fair value and is the sum
of assets transferred by acquirer, liabilities incurred by acquirer, and equity interests issued by the
acquirer (FASB 805–30–30–7). If the sum includes carrying amounts that differ from the fair value
then these assets and liabilities should be re–measured at fair value and gains or losses should be
recognized (FASB 805–30–30–8). Assets and liabilities that are held both before and after the
business combination should not recognize a gain or loss; they should be measured at their carrying
amounts directly before the acquisition date (FASB 805–30–30–8).
Contingent Consideration – A contingent consideration is usually an obligation of the acquirer to
transfer additional assets or equity to previous owners if specific conditions are met (FASB 805–30–
20). This type of

Advanced Financial Accounting
CHAPTER 4 Consolidation of Wholly Owned Subsidiaries Acquired at More than Book Value
ANSWERS TO QUESTIONS Q4–1 The carrying value of the investment is reduced under equity
method reporting when (a) a dividend is received from the investee, (b) a differential is amortized,
(c) an impairment of goodwill occurs, and (d) the market value of the investment declines and is less
than the carrying value and it is concluded the decline is other than temporary. Q4–2 A differential
occurs when an investor pays more than or less than underlying book value in acquiring ownership
of an investee. ... Show more content on Helpwriting.net ...
The existence of a large differential indicates the parent paid well over book value to acquire
ownership of the subsidiary. When the differential is assigned to identifiable assets or liabilities of
the subsidiary, both the consolidated balance sheet and consolidated income statement are likely to
provide information not available in the financial statements of the individual companies. The
consolidated statements are likely to provide a better picture of the assets actually being used and
the resulting income statement charges that should be reported. Q4–10 Consolidated net income is
equal to the parent's income from its own operations, excluding any investment income from
consolidated subsidiaries, plus the income of each of the consolidated subsidiaries, adjusted for any
differential write–off. Q4–11 An additional eliminating entry normally must be entered in the
worksheet to expense an appropriate portion of the amount assigned to buildings and equipment.
Normally, depreciation expense is debited and accumulated depreciation is credited. Q4–12 If the
differential arises because the fair value of land, or some other non–depreciable asset, held by the
subsidiary is greater than book value, the

The Need For Book / Tax Reconciliation
Table of Contents
Introduction 2
The Need for Book/Tax Reconciliation 3
Facts Used in Illustration
.....................................................................................................................................4
Analysis of Book/Tax Differences used in Illustration
....................................................................................5
Illustration of Book/Tax Reconciliation
............................................................................................................8
Conclusion
............................................................................................................................................................8
Works Cited Page
.............................................................................................................................................10
Introduction:
Accounting has two major systems in place to present information in the United States of America.
The systems are GAAP; Generally Accepted Accounting Principles; and Income Tax Basis. The
systems share a common goal; to make information easy to read and understand across the business
... Show more content on Helpwriting.net ...
The methods described in the code section are,
(1) The cash receipts and disbursements method (cash method for short)
(2) An accrual method
(3) Or a hybrid method
Accrual method for income is not the same as accrual or GAAP. The differences between the three
methods and what is known as GAAP accrual is where the Book (GAAP) to Tax differences arise.
The Need for the Book to Tax Reconciliation The Book to Tax reconciliation is used to get from
book income, usually following GAAP accrual, to taxable income. For small companies, Schedule
M–1 is used. For larger companies, Schedule M–3 is used. Companies following GAAP want their
income to be as high as possible to attract investors; however on their tax return they would like
income to be as small as possible creating a smaller tax liability. Following the logic, book to tax is
needed to make both the investors happy and the company paying the tax happy. FASB has created
a way to deal with the problem, ASC 740: Accounting for Income Taxes. Before ASC 740 was
FASB No. 109, a similar version of accounting for income taxes without uncertain tax positions

addressed. Uncertain tax positions were addressed in a code 48. ASC 740 brings both codes
together. ASC 740 states,
There are two primary objectives related to accounting for income taxes:
a. To recognize the amount of taxes payable or refundable for the current year
b. To recognize

Balance Sheet and Goodwill
Goodwill is an intangible asset, probably the most intangible of all intangible assets, hard to
measure and even more difficult to account for. Goodwill today constitutes a much larger part of
acquisition prices than it did previously, resulting in a much greater impact on financial statements.
During the twentieth century the concept of goodwill has changed significantly. In the earlier days
goodwill was thought of as the good and valuable relationships of a proprietor of a business with his
customers. The present concept is broader in that it encompasses many more intangible economic
factors of a business enterprise and accountants now consider that goodwill results from the
evaluation of the earning power of a business by investors ... Show more content on Helpwriting.net
...
It is no wonder that managements, in order to avoid this reduction in reportable earnings, frequently
opt to use the pooling of interest method when they complete a merger. Since no goodwill is created,
over–eager managers are able to pay outrageous prices for acquisitions with little or no
accountability on the balance sheet. Since it makes no sense to have two different ways for
accounting for a merger, the FASB decided they should eliminate the pooling of interest method and
force all transactions to be done via the purchase method. Executives and politicians claimed this
will significantly reduce the number of mergers since the new standards would cause reportable
earnings to drop as soon as a company had completed an acquisition. As a concession, the FASB
will no longer require goodwill to be written off unless the assets became impaired (which means it
becomes clear that the goodwill is not worth what the company paid for it).
The FASB 's six members unanimously approved two new accounting standards on Friday July 23,
2001. Financial Accounting Statement 141 will eliminate the pooling–of–interest method for
booking mergers. The method had been popular with dealmakers because it allowed companies to
do deals at a premium without marking up their assets. These markups inflate the size of future
amortization expenses and depressed reported earnings, supporters of pooling said. The FASB also
passed Financial Accounting Statement 142 – a closely– related standard

Difference Between Goodwill And Impairment
Introduction
Goodwill and impairment is very well related in accounting concept, impairment is a concept in
accounting that explains stable reduction in value of asset (Dauang–
ploy,O.,Shelton,M.,&Omer,K.,2005). To calculate impairment loss it is essential to de–cide the
amount of value in use, and this involve the calculation of the cash flows which are supposed to be
produced from the use of assets. Goodwill can only be recognised when it is obtain in business
combination.
Impairment
Impairment is a concept in accounting that explains stable reduction in value of asset.
Total profit and cash flow are expected to be produce by certain asset which is occa–sionally
contrasted with book value. If the book value is more than cash flow of the asset, the remaining
amount should be written off and the value should be rejected from the balance sheet
(Dauangploy,O.,et. al.,2005). If the carrying amount is more than recoverable amount, it can
indicate the loss of impairment. Then the recover–able amounts need to be written down. There are
two different models to recognise impairment, cost model and revaluation model. Impairment loss
in cost model can be recognised directly in profit or loss. In revaluation model asset is measured in
its fair value and impairment loss is recognised as descending revaluation.
Impairment loss, Cash Generating Unit¬¬¬¬¬¬
To calculate impairment loss it is essential to decide the amount of value in use, and this involve the
calculation of the cash flows which are supposed to be produced from the use of assets. Though,
some assets don't produce cash flow by itself. This is the reason why the cash flow is increasing due
to the combination of few assets together. In other word, car used by sales person does not produce
cash flow by itself (Sun,L., & Zhang,J.,2017). When the asset can not generate cash flow by itself it
is necessary to group them and it is called "cash generating unit". Cash generating unit is the
smallest recognisable group of assets that brings cash inflow.
At the end of the period after identifying what is Cash Generating unit is, manage–ment need to
figure out if impairment is occur or not. If there is possibility of impair–ment, calculation of
recoverable amount of the

Business Merger Between Lenovo And Motorola Mobility
Business Combination between Lenovo and Motorola Mobility Details of company acquired
Lenovo is a Chinese multinational computer technology company operating in more than 60
countries and selling its products in around 160 countries. Motorola, an American company, focus
on making cell phones and other electronics. In recent years, Motorola has experienced a bad
financial situation and in 2011 Motorola split into two separate companies, Motorola Mobility and
Motorola Solutions. In August 2011, Google acquired Motorola Mobility using about US$12.5
billion. In 2014, October 30, Lenovo announced that they have already finished the acquisition of
Motorola Mobility from Google and they will operate the Motorola as a wholly–owned subsidiary.
Lenovo paid Google about US$2.9 billion to complete this transaction which included
approximately US$660 million in cash and US$750 million ordinary stock issued by Lenovo. The
remaining US$1.5 billion will be paid to Google by using three–year promissory note. In this paper,
we just consider the transaction between Lenovo and Motorola Mobility. Allocation of acquisition
differential (see Exhibit 1) The purchase consideration paid for 100% of Motorola Mobility was
$3.09 billion, including cash paid, consideration shares, deferred consideration and share–based
compensation obligation assumed by the company. The acquisition differential is therefore $1.224
billion. We calculated it by finding the difference between the purchase

Case Study : Ida Inc.
Intro
Ida Inc. is a manufacturing company that has operations in both the United States as well as Spain.
Ida is a U.S. subsidiary of a U.K. company and as such reports its financial statements according to
both GAAP and IFRS. Ida owns several assets including a building which is valued at cost minus
accumulated depreciation and impairment and is represented as a Cash Generating Unit under IFRS
and long–lived asset under GAAP. A Cash generating unit is the smallest group of assets that can
generate cash and is independent of other asset's cash flow under IFRS. A long–lived asset is any
asset that a company expects to control for at least a year. In 2008, Ida acquired a Spanish company
headquartered in Spain. In 2010, one of Ida's competitors sold their similar building nearby for way
below asking price. Later on in 2010 a new government regime passed legislation limiting the
exporting of Ida's chief product in all markets. The new legislation led to a downturn in the market
for Ida's product which when coupled with the actual legislation serves as an impairment indicator
which requires Ida to estimate recoverability. Impairment is a reduction in a company's capital and
specifically when the capital is less than the par value of the company's stock (Investopedia.com).
Under IFRS, impairment is when the carrying amount of an asset exceeds the book value, while
under GAAP, impairment exists when the carrying amount of an asset is greater than than the
undisclosed sum of

The Requirements Of Australian Standards
Accounting for Business Combinations and its relevant issues under the requirements of Australian
standards have raised a considerable number of concerns, and therefore remained controversial for
both accountants and scholars who have been struggling to deal with the practical – and –
theoretical development of the Accounting industry. Regardless of such difficulties, due to the
undeniable meaning of Accounting practices and the enormity of transactions involved on a daily
basis, it is of great importance to research, study and understand the application of Business
combination Accounting according to Australian requirements.
As a matter of fact, within the limitation of a short paper, this study aims to provide a critical review
on the Accounting issues in Business combination under the requirement of Australian standards –
or to be specific, under the conceptual framework provided by the Australian Accounting Standard
Board (AASB.) Firstly, evaluation on the exclusions from the scope of AASB 3 is brought about,
followed by the implications of the requirement to use the acquisition method of accounting for
business combinations, the determination of fair value of assets, the reasons why fair value method
is chosen in a business combination and lastly, a review on the nature and treatment of goodwill or
bargain purchase from these particular transactions will be mentioned.
Exclusions from the scope of AASB 3
First of all, the determination of Business combination stated in

Essay about acct540 week#5
RE: Sony's Goodwill and Segment Reporting
Facts:
Sony have been known worldwide as a Japanese multinational company, its efforts trying to
expanding business in United States, have made that Sony acquires CBS Records and Columbia
Pictures. Thus, creating Sony Music and Sony Pictures, which represent Sony entertainment. This
involved to the company in $1.2 billion of debt, and assigned goodwill assets for $3.8 billion.
The last filing with SEC reported just two main segments: electronics and entertainment. The results
of these segments, have brought profitability in Sony music and continuous losses in Sony Pictures.
Its projections calculated loss for five years in the entertainment pictures, considering that it would
become ... Show more content on Helpwriting.net ...
Since 2001, amortization would not permitted for goodwill assets. Instead write–down of goodwill
entity with continuous losses must be done.
2– The Financial statement disclosure is required when a company has two different segments, as is
the case of the Sony Entertainment.
Authorities on Goodwill assets are as follow:
I would like to start citing ASC 350–20–20 – Intangible Asset– Goodwill–Glossary
Where explain the concept of Intangible asset, which represents assets that absence of physical
substance. Moreover, Goodwill represents an asset from which is expected future economic
benefits, emerge from the acquisition of other assets or business combination. Another important
point would be the impartments testing as refers ASC 350–20–35–28 where indicates that Goodwill
of reporting unit must be tested for impairment annually. The test can be accomplished at any time
in the fiscal year. In the case of different reporting unit, the impairment test could be at different
times. This citation in the memorandum was provided incorrect (ASC 305–20–35–1 and 28) this
encoding does not exist in FASB.
Another consideration is the citation ASC 350–20–35–4, which is related with the first step to
accomplish goodwill impairment test. The memorandum stated only the (IAS 36.105) impairment
losses.
Authorities on Segment Disclosure:
ASC 280–10–50–10 describe the criteria for reportable segments, if the criteria

Client Understanding Paper
Client Understanding Paper
Accounting Issue:
When and why to adjust inventory values to lower of cost or market?
Sources:
330–10–35–1
35–1 A departure from the cost basis of pricing the inventory is required when the utility of the
goods is no longer as great as their cost. Where there is evidence that the utility of goods, in their
disposal in the ordinary course of business, will be less than cost, whether due to physical
deterioration, obsolescence, changes in price levels, or other causes, the difference shall be
recognized as a loss of the current period. This is generally accomplished by stating such goods at a
lower level commonly designated as market.
330–10–35–2
35–2 The cost basis of recording inventory ordinarily ... Show more content on Helpwriting.net ...
835–20–10–2 10–2 On the premise that the historical cost of acquiring an asset should include all
costs necessarily incurred to bring it to the condition and location necessary for its intended use, in
principle, the cost incurred in financing expenditures for an asset during a required construction or
development period is itself a part of the asset 's historical acquisition cost. The cause–and–effect
relationship between acquiring an asset and the incurrence of interest cost makes interest cost
analogous to a direct cost that is readily and objectively assignable to the acquired asset. Failure to
capitalize the interest cost associated with the acquisition of qualifying assets improperly reduces
reported earnings during the period of acquisition and increases reported earnings in later periods.
Apply to Guidance: When financing the construction of a building, the interest should be capitalized
as part of the cost of the building. This would more adequately match revenues and expenses in the
period in which they are earned. When the building is being used and the cost thereof is being
allocated via depreciation, the expenses would adequately reflect the cost of the building and
include a portion of the interest that was incurred as the building was being constructed. If the
interest is not

Balance Sheet and Cost
E12–1 (Classification Issues–Intangibles) Presented below is a list of items that could be included in
the intangible assets section of the balance sheet.
Instructions
(a) Indicate which items on the list would generally be reported as intangible assets in the balance
sheet. (b) Indicate how, if at all, the items not reportable as intangible assets would be reported in
the financial statements. 1. Investment in a subsidiary company.
2. Timberland.
3. Cost of engineering activity required to advance the design of a product to the manufacturing
stage.
4. Lease prepayment (6 months' rent paid in advance).
5. Cost of equipment obtained.
6. Cost of searching for applications of new research findings.
7. Costs ... Show more content on Helpwriting.net ...
The amortization expense is 75,000/12=$6,250
.
Dec 31 ,2012
Amortization expense 6,250
Patents 6,250
E12–12 (Accounting for Goodwill)
The entry in Graff's books is
Cash 100,000
Land 120,000
Buildings 200,000
Equipment 170,000
Copyrights 30,000
Liabilities 350,000
Fair value of net assets 270,000
Cash 380,000
Goodwill=380,000–270,000=$110,000
E12–16 (Accounting for R&D Costs) Margaret Avery Company from time to time embarks on a
research program when a special project seems to offer possibilities. In 2011, the company expends
$325,000 on a research project, but by the end of 2011 it is impossible to determine whether any

benefit will be derived from it.Instructions
(a) What account should be charged for the $325,000, and how should it be shown in the financial
statements?
The amount of $325,000

Accounting And Its Effect On The Asset Of The Portfolio
Depreciating assets over their useful lives, rather than just expensing them in the year they are
acquired.
When an asset such as new equipment is purchased by an organization, the seemingly obvious
choice for reporting such an expense would be to record it entirely at the time of its purchase, and
simply record income in the years following. This, however, is not the method used by accountants.
Rather, they use a method of depreciating the asset. This basically means spreading the expense of
the asset of the years of its useful life. This is the required method of accounting, according to the
matching principle. This principle states that to record the entire expense the first year would skew
the results of operations over the asset ... Show more content on Helpwriting.net ...
It is for this reason that the depreciation expense is taken and added to overall net income at the end
of each subsequent year. This method 's use or value may not be apparent at first, but through its
practice we see why this is the standard in regards to this area of financial reporting. Since the goal
is to give the fairest representation of the financial position, at times adjustments such as these must
be made.
What equation describes the periodic inventory system?
In a periodic inventory system, on hand items are tracked from time to time rather than
continuously. This requires the company using the system to obtain a physical count at any time
they must record the inventory. The equation used in this system takes the balance of the beginning
inventory, plus all purchased items, and subtracting the ending balance. This formula determines the
amount of inventory that was sold or used since the previous count was taken. For example, if a
store hand a beginning inventory of 1,000 units, purchased an additional 4,000 units, and had an
ending balance of 2,000 units, they have determined that 3,000 units were sold. The limitations of
this system are that the company does not continuously know how many items are on hand, as well
as the inability to know that one of the missing units was sold and not stolen, damaged, etc. This
limits the company 's abilities in ordering additional stock due to low

International Case Study: ABN AMRO
Group operating profit, excluding credit market write–downs and one–off items, impairment losses
on reclassified assets, amortization of purchased intangible assets, write–down of goodwill and
other intangible assets, integration costs, restructuring costs and share of shared assets, was £80
million, compared with a profit of £10,314 million in 2007. Losses also rose to £7,781 million,
compared with £2,387 million in 2007. The loss before tax of Group recorded of £25,038 million,
compared with a profit before tax of £8,962 million in 2007. Total income also declined to £26,875
million, while total net interest income rises to £15,939 million, with average loans and advances to
customers up 17% and average customer deposits up 6%. Operating ... Show more content on
Helpwriting.net ...
Before the acquisition, RBS understood that ABN AMRO would receive approval for its IRB
models. But after acquisition ABN AMRO's progress towards IRB approval raised questions about
how RBS, would be able to comply with Basel II at the consolidated level so, ABN AMRO
withdraw its application and did not receive approval. ABN AMRO and DNB agreed that ABN
AMRO would continue to report capital on the basis of Basel I which included minimum ratio of
9% for tier 1 and for total capital it was 12.5%. The risk associated with the fact that ABN AMRO
had not received IRB approval yet. In 2008 there were internal FSA discussions related to RBS's
first quarter reporting approach and the approach finally by the FSA to calculate capital
requirements based on Basel IRWAs with an uplift of 30%, ABN AMRO will continued to operate
on this basis and this approach produced a higher capital figure than the Basel II IRB model–based
approach would have done. And this higher capital requirement additional strain on RBS's capital
resources and contributed to RBS's apparent fall below individual capital guidance as at end March

The Value Of Goodwill And The Acquisition Of Nextel
In 2005, Sprint finalized the acquisition of Nextel. Since Sprint paid a considerate amount over the
fair value estimate of Nextel, they reported the excess as goodwill. Following the purchase of
Nextel, Sprint has had difficulty integrating the acquisition. Due to the continuing struggles of the
acquisition, possible impairment may exist. The first step needed in identifying the possibility of
impairment is various qualitative factors. Sprint falls into the three qualitative factors of increasing
costs, decreasing of overall financial performance, and decreasing in stock price. Since these factors
exist, we must test for impairment. In testing for impairment, the fair value of the company is
compared to the book value. The book value of ... Show more content on Helpwriting.net ...
The second qualitative factor relating to Sprint has to do with the overall financial performance.
FASB codification establishes if the overall financial performance decreases, meaning decreasing
cash flows or negative revenue compared to previously project revenues, then impairment may
exists . The most recent example of this is last quarter when our company experienced a 215 million
dollar decrease in income from continuing operations compared to the previous year's third quarter.
The final qualitative factor relating to Sprint deals with the company's stock price. FASB claims a
decrease in share price that is sustained is a qualitative factor . In 2005, our company's stock price
was $23.36 per share and has been decreasing ever since. Now, it remains at $19 per share. Since
there are three qualitative factors relating to Sprint, it seems relatively likely that the carrying value
of goodwill exceeds the fair value. According to FASB, the entity now must perform the first step of
the two step impairment process . The first step of the impairment test compares the fair value of the
company to the carrying value . The fair value of a company is the amount they would receive on
the current date if they were to sell all of their assets. According to FASB, market prices in actual
markets exists as the best method for computing fair value . This can be done by taking the market
price per share times

Essay about borland case study
Borland Software Corporation Case Study
Concepts
A) Intangible assets are operational assets that lack physical substance. However, the future
economic benefits that are derived from intangible assets are usually less certain than tangible
operational assets. Due to this uncertainty, the valuation of these assets rely upon multiple
estimations, therefore the reliability of the information may not be as accurate. Additionally, the
relevance of the data in the decision making process comes into question since the future benefits
are unknown. Copyrights, franchises, goodwill, patents, and trademarks are just a few examples of
intangible assets.
Under Generally Accepted ... Show more content on Helpwriting.net ...
When taken in proportion to total revenues and general expenses, the percentage that composes
advertising expense decreases each year. Since advertising costs are expensed the first time the
advertising takes place, this may not represent an actual decrease in advertising, just a decrease in
new advertising campaigns.
iii) Looking at the assets of the company may help to show fluctuations in the current value at least
in terms of book value. Even more so, the company's stock price will help to see where investors see
the current value of the company and its brands.
G) i) For the purchase of Segue Software, Inc, the purchase price was allocated to the acquired
assets and liabilities based on their estimated fair values on the date of acquisition with the
remaining classified as goodwill. The developed technology, customer relationships, agreements,
and trademarks are all amortized over their respective periods. These amortizable intangible assets
were calculated using the income approach by estimated the expected cash flows from once the
projects become viable and discounting them to the present value.
ii) 131,663/141,456 = 86.93%
iii) In process research and development is research and development acquired from Segue
Software, Inc that had not reached technological feasibility and

The Value Of Goodwill And Goodwill Essay
"What is goodwill?" Based on the information on the internet, goodwill is defined as "the excess of
purchase price over the fair market value of a company 's identifiable assets and liabilities."
Moreover, goodwill is reported as a non–current asset on the balance sheet. But the U.S companies
are not required to amortize the record amount of goodwill since 2001. Because the value of
goodwill is highly subjective, the accounting standard requires the goodwill to have impairment test
at least once per year in order to determine the amount of goodwill. However, when reporting the
goodwill in terms of valuation and impairment, there are some rules that people need to follow
under the US GAAP. Moreover, there are also some similarities and differences regarding valuation
and impairment of goodwill between US GAAP(Generally Accepted Accounting Principles) and
IFRS(International Financial Reporting Standards). First of all, under US GAAP on ASC 805, the
value of goodwill can be recognized initially by measuring any excess of the fair value of the
acquired business over the fair value of the net identifiable assets acquired. According to the ASC
805–30–30–1 from the FASB website, it mentions that "The acquirer shall recognize goodwill as of
the acquisition date, measured as the excess of (a) over (b): (a) The aggregate of the following: (1)
The consideration transferred measured in accordance with this Section, which generally requires
acquisition–date fair value

First Motor Essay
AUDIT MEMORANDUM
To: First Motors Corporation
From: Nam Do
CC: Dr. Jeff Archambault
Date: 11/10/2011
Re: The Accounting Policies and Procedures
Purpose:
The purpose of the audit memo is to clarify the accounting policies and procedures used by clients
and the accounting policies and procedures that should be followed. The audit memorandum also
provides a clear explanation of a difference between the risk premium in discounting the free cash
flow from Plant 3 and the risk premium in discounting the cash flows for the Macinaw Division and
which of the appropriate discount rate for computation of goodwill impairment. The case mentioned
about impairments which will be written down after the assets are tested for impairments and how ...
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An impairment loss is equal to the excess of the carrying amount over the fair value of the asset.
Thus, once it is determined that carrying value will not be recovered, an impairment loss must be
recognized". For purposes of testing for recoverability and measuring an impairment loss, individual
long–lived assets should be grouped with other assets forming the lowest level for which
identifiable cash flows are largely independent of those of the entity's other assets. Note, though,
that, if an impairment loss is recognized, it should be applied only to the long–lived assets in the
group that are covered by FASB ASC 360–10 ; thus, other assets in the group are not affected but
should, if necessary, be adjusted for impairment in accordance with other applicable GAAP. As
defined in FASB ASC 350–10: "Goodwill should be part of an asset group to be tested for
impairment only if the group is itself a "reporting unit" or includes such a unit". Note that when we
want to evaluate or compute the implied goodwill or test goodwill impairment, we should include
the combined net assets of Plant 3 which includes property, plant and equipment. 8A–Impairment or
Disposal of Long–Lived Assets (WG&L) provided relevant parts that: "impairment occurs
when the carrying amount of asset is not recoverable and a write–off is needed". The section also
mentioned about various events and changes in circumstances might lead to an impairment

Business Combination
Assignment 1: Business Combinations
Cindy Yoon
Professor Robert Neely
ACC 401 – Advanced Accounting
October 24, 2013
Abstract
In this paper, I will provide an explanation for the business combination method I selected in
expanding the corporation by acquiring another firm, the reason for selecting that business
combination method, and how the purchase will grow the business. I will also analyze the
accounting requirements for the business combination method I selected and how I determined
goodwill was impaired and the financial impact of such impaired goodwill.
The business combination method I selected is the acquisition method. Business combinations have
implemented the newly created accounting treatment called the ... Show more content on
Helpwriting.net ...
A requirement of this method is that the acquirer must be identified in every business consolidation
clearly. Below are several key components changes in the acquisition method: Measurement of the
subsidiary's net identifiable assets is based on the fair value of the subsidiary as a whole, rather than
based on the cost of purchase at the acquisition date. The acquisition date is the closing date that the
purchaser obtains control of the acquired business. For example, the parent will still have full
control of the entire subsidiary even if they purchased less than 100% of the net identifiable assets.
The parent incorporates the full fair value of the subsidiary in the consolidated financial statements
and then allocates to the non–controlling interest. The key difference between the purchase method
and the acquisition method is that in the acquisition method, all of the Fair Market Value increment
and all of the goodwill is recognized, including the portion attributable to the non–controlling
interest. The reason behind this idea is that a business in control of another entity should be able to
fully control

Corporate Accounting Aasb3 136 Impairment of Assets Essay
Part A (6 Marks)
AASB 3 Business combinations para.14 requires that the acquisition method be used to account for
business combinations. This method requires the identification of the acquirer. For example, para.17
states that "an acquirer shall be identified for all business combinations".
Provide and explain a list of factors that may assist management to identify the acquiring entity.
Explain why it is necessary to identify who is the acquirer in a business combination? (Adapted
from Leo et al. Case 2, p.395).
Part B (19 Marks)
Sahara Ltd recently adopted the international accounting standards. The management of Sahara Ltd
are seeking your advice regarding impairment testing under AASB 136 Impairment of Assets. ...
Show more content on Helpwriting.net ...
Q.2) Explain why it is necessary to identify who is the acquirer in a business combination? It is
necessary to identify the acquirer in a business combination because: * The acquirer is the
combining entity that obtains control of the other combining entities or businesses. * To measure the
cost of a business combination as the aggregate of:
* the fair values, * at the date of exchange, * of assets given, * liabilities incurred or assumed, and *
equity instruments issued by the acquirer, * in exchange for control of the acquiree; * plus any costs
directly attributable to the combination.
* To recognise separately, at the acquisition date, the acquiree's identifiable assets, liabilities and
contingent liabilities. * To reassess the identification and measurement of the acquiree's identifiable
assets, liabilities and contingent liabilities and the measurement of the cost of the business
combination if the acquirer's interest in the net fair value of the items recognised exceeds the cost of
the combination. Any excess remaining after that reassessment must be recognised by the acquirer
immediately in profit or loss.
Part B Sahara Ltd recently adopted the international accounting standards. The management of
Sahara Ltd are seeking your advice regarding impairment testing under AASB 136 Impairment of

Goodwill Is An Intangible Asset
Goodwill is an intangible asset recorded on the balance sheet when one business acquires another
business and when the purchase price, or carrying value, is greater than the fair market value. It
includes the reputation, brand, geographic location, patents, employee commitments, and etc of the
acquired company. Goodwill is calculated by deducting the carrying value from the fair market
value of identifiable assets and liabilities. According to the FASB Accounting Standards
Codification (ASB), which is the authoritative source for GAAP, if fair value is less than the
carrying value, net identifiable assets, then there may be a potential impairment loss. (FASB ASC
350, 2013). Net identifiable assets typically include a summation of ... Show more content on
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Finally, the standard also indicates that the component should be combined and treated as a single
reporting unit in limited circumstances.
It is crucial to ensure that the reporting units are identified properly because testing impairment at
the reporting unit level, versus testing another level, could result in dramatically different
conclusions. For example, goodwill that does not appear to be impaired at the consolidated level,
perhaps due to the strong performance of some segments, may offset the deteriorating performance
of others. However, goodwill rose from the acquisition upon the poor performing segments, so
testing that goodwill for impairment at the segment level might result in an entirely different
conclusion.
ASC 350–20 specifically indicates that the impairment test should be performed on an annual basis.
Importantly, the entity has the option of selecting the date in which they want to perform the test,
which doesn't have to be in its fiscal year end. But once the date is selected, the test should be
performed at the same day in subsequent periods to avoid bottlenecks. In addition to performing the
test on an annual basis, the test should be performed when every balanced circumstance indicates
that the fair value of goodwill is less than its carrying value (FASB ASC 350, 2013). Finally, entities
often perform impairment tests and have different assets with the same

Q3 Innovation Essay
WEEK 5 / ASSIGNMENT 1
Case Analysis: Nantucket Nectars
PRO's & CON's
Tom Scott and Tom First founded Nantucket Nectars in 1990 as a small side–business on
Nantucket's Straight Wharf. A peach fruit juice drink that Tom First discovered while visiting Spain
inspired him and his partner to embark upon the journey of building their juice company. After only
six years, the two entrepreneurs built a business that was generating $29,493,000 per year in
revenue and $969,000 in EBITDA. With remarkable success came exciting opportunities, as well as
challenging decisions. Specifically, Tom and Tom were faced with the dilemma of taking the
company down one of three roads including: taking the company public via IPO, selling the
business, ... Show more content on Helpwriting.net ...
Many entrepreneurs enjoy the early "start–up" phases of the business cycle.
Of course, selling a business has its drawbacks, as well. First, the buyer often requires that the
management team from the acquisition target stay on board for a specific period of time and achieve
certain key performance indicators before receiving the entire payout. Often, there is a lump sum
delivered up front, and then incremental payouts upon achieving KPI's. This could be frustrating to
Tom and Tom, as they would relinquish all of their independent decision–making powers and have
to take the back seat as employees. Typically, this is not a comfortable position for entrepreneurs to
take. Also, Tom and Tom built up a loyal and talented staff of employees at Nantucket Nectar.
Acquisitions are typically driven by synergies and, as a result, certain employees could be
terminated in pursuit of cost savings. Finally, Tom and Tom would have to deal with the fact that
their company culture would be at risk. Often, the buyers culture engulfs that of the company being
acquired. The third option available to Tom and Tom is taking the company public, or an IPO (Initial
Public Offering). The most obvious advantage of going public is that Nantucket Nectar would have
an immediate influx of capital available due to the sale of its stock. With excess capital available,
they could purchase assets for distribution and manufacturing, invest in

Fei Lecture
WHAT IS GOODWILL?
The main method used by businesses to classify assets is to split them into tangible assets, which
have a separate existence from the business (examples of which would include buildings, land and
machinery), and intangibles which do not. Some clear examples of intangibles include goodwill,
patents, research and development expenditure and trademarks. Intangible assets are usually created
within the organisation over a period of time, by the company itself, rather than acquired from an
external source and are rarely sold off individually – they can normally only be sold in conjunction
with associated tangible assets.
Robins, in his essay "FRS 10: Goodwill and Intangible Assets" identifies three sources of goodwill
... Show more content on Helpwriting.net ...
It was not allowable to carry goodwill at cost indefinitely.
By immediately writing off purchased goodwill the company makes the treatment of goodwill
equitable throughout the company. As inherent goodwill is not shown as a direct asset in the usual
balance sheet it seems contradictory and inconsistent to record purchased goodwill. In addition, as it
is not possible to realise goodwill independently of the company and it cannot be attributed a capital
worth in a liquidation it seems unrealistic to record goodwill as an asset in the balance sheet. This
would also suggest that amortisation of the intangible asset over any period should not be deferred
and attributed to any future income.
However, in practise the immediate write–off to reserves is not altogether straightforward. As the
goodwill has already been allocated an economic value for the purposes of the company sale it is
difficult to argue that purchased goodwill is not an asset. The immediate writing off the amount to
reserves ignores the existence of purchased goodwill. As outlined by Robins, it is also "inconsistent
to charge expenses incurred for building up inherent goodwill to the profit and loss account and to
write off purchased goodwill against the reserves" By amortising the intangible fixed asset through
the profit and loss account either over its "economic useful life" or over a specific number of years,
the goodwill can

Goodwill Impairment Essay
Case 1 Goodwill Impairment Testing
Should management have performed an interim goodwill impairment test as of September 30, 2010?
Galaxy Sports Inc. (Galaxy) is a U.S. based manufacturer of sports equipment. It is an SEC
registrant with one operating segment with three separate reporting units: fitness, golf and hockey.
The fitness is the largest division of Galaxy with allocated goodwill of $200 million. The golf
division reports $130 million of goodwill and the hockey has $30 million of goodwill. Each division
has been a reporting unit for a number of years. Due to the complexities involved with the
calculation of goodwill and resource restraints in 2009, Galaxy decided to hire Big Time LLC (Big
Time) to perform three annual ASC ... Show more content on Helpwriting.net ...
An example is a recent significant acquisition or a reorganization of an entity's segment reporting
structure that might significantly change the composition of a reporting unit, b) the most recent fair
value determination resulted in an amount that exceeded the carrying amount of the reporting unit
by a substantial margin, and c) based on an analysis of events that have occurred and circumstances
that have changed since the most recent fair value determination, the likelihood that a current fair
value determination would be less than the current carrying amount of the reporting unit is remote.
In 2008, Harris Interactive performed an interim test based on the following reasoning: * operating
losses in its reporting unit for the fiscal quarters ended September 30, 2008 and December 31, 2008
* potential declines in market research spending for calendar year 2009 based on industry analyst
forecasts * headcount reductions and related charges as announced in October and December 2008,
the details of which are described in Note 4, "Restructuring and Other Charges" to these unaudited
consolidated financial statements, and a 62% decline in the Company's per share stock

Goodwill Is An Intangible Asset
Goodwill is an asset that is an intangible asset. Goodwill represents the future economic benefits
that arise from acquiring assets during a business amalgamation. A goodwill reflects the difference
between the purchase price and the fair value of acquiring a company's assets or a business merger.
According to the generally accepted Accounting Principle goodwill is not amortized. Therefore, on
the balance sheet there would not be an accumulated goodwill amortization. Impairment on a
goodwill is tested annually or whenever issues arise. Note, if an impairment has occur the amount
will be written down as an increase to the goodwill valuation account.
Goodwill is an intangible asset that is recognizable by it nonmonetary asset. Goodwill has no
physical material or matter. Intangible asset are said to be either divisible or comes from contractual
or other form of legal rights, which has the authority to gain future economic benefits.
Although the procedures in this process can be difficult and is subjected to a great degree of
interpretation. Even though the calculation that is required can be subjected to a guess. The new
proposed treatment has been tackling with the problem of ambiguity and subjectivity aiming at the
financial report preparers and auditors who will have some major implication regarding corporate
governance and auditing.
Goodwill, in the law and accounting, an intangible asset established a value over and above the
valuation of the tangible assets of the

The Impact of Assets Impairment on Company Accounts
The Impact of Assets Impairment on Company Accounts Assignment 1 ACCT 20054 – Company
Accounting Term 2, 2012 Prepared & Submitted by Jobish Mathew S0214315 Tutor: Davood
Alizadeh Due date: 24th August 2012 Submitted date: 24th August 2012 Executive Summary The
study 'The Impact of Assets Impairment on Company Accounts' presents the cotemporary issues
facing by major five Australian companies Qantas, Ten Networks, Billabong, Bluescope steel and
Harvey Norman. This research mainly deals with controversies surrounding the recent introduction
and application of 'fair value' measurement system by the IASB and AASB. The author refers an
article written by Adele Ferguson published in 'The Age' newspaper on 14th ... Show more content
on Helpwriting.net ...
of O. S* (millions) | 252 | 253 | 253 | 254 | 254 | 254 | | M.C*(Millions) | $ 2205 | 2770 | 2211 | 2070 |
1527 | 349 | | % changes in M.C | –– | 25.62 | (20.18) | (6.38) | (26.23) | (77.14) | | B.V* (Millions) | $
1176 | 1190 | 1217 | 1173 | 1196 | –– | | % changes in B.V | –– | 1.19 | 2.27 | (3.62) | 1.96 | –– |
BLUESCOPE | S.P* | $ 2.53 | 3.11 | 2.10 | 2.25 | 1.21 | 0.405 | | No. of O. S* (millions) | 1823 | 1823
| 1823 | 1823 | 1842 | 1842 | | M.C*(Millions) | $ 4612 | 5670 | 3828 | 4102 | 2229 | 746 | | % changes
in M.C | –– | 22.94 | (32.49) | 7.16 | (45.66) | (66.53) | | B.V* (Millions) | $5663 | 5607 | 5756 | 5507 |
4396 | –– | | % changes in B.V | –– | (0.99) | 2.66 | (4.33) | (20.17) | –– | HARVEYNORMAN | S.P* |
$ 3.30 | 4.22 | 3.31 | 2.94 | 2.44 | 2.02 | | No. of O. S* (millions) | 1062 | 1062 | 1062 | 1062 | 1062 |
1062 | | M.C*(Millions) | $ 3505 | 4482 | 3515 | 3122 | 2644 | 2145 | | % changes in M.C | –– | 27.87 |
(21.58) | (11.18) | (15.31) | (18.87) | | B.V* (Millions) | $2059 | 2152 | 2157 | 2189 | 2228 | –– | | %
changes in B.V | –– | 4.47 | 0.23 | 1.48 | 1.78 | –– | *M.C (Market Capitalisation) = Share Price × No.
of Outstanding Shares *S.P = Share price, *B.V = Book Value, *O.S = Outstanding Shares *As on
17/08/12 – The author added

Goodwill Balance Sheet
GOODWILL
What is the definition of Goodwill?
Goodwill is an intangible asset that mostly appears as the biggest intangible asset on the balance
sheet. The Goodwill can only be identified with the business as a whole. Therefore, the goodwill
cannot be sold individually in the marketplace, while some other intangible assets can be sold.
Goodwill is not easy to measure, because it includes exceptional management, desirable locations,
customer relations, and so on. The determination of the Goodwill is therefore most of the time very
subjective.
Companies only record the goodwill when there is an exchange transaction the involves the
purchase of an entire business.
When the company is purchased by another company, the goodwill ... Show more content on
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Goodwill booking in the balance sheet
According to Harold Averkamp (2015), Goodwill is reported on the balance sheet as a noncurrent
asset.
Since 2001, U.S. companies are no longer required/allowed to amortize the recorded amount of
goodwill.
"In accounting we use the word amortization to mean the systematic allocation of a balance sheet
item to expense (or revenue) on the income statement." Harold Averkamp (2015)
The amortization of an asset means that a company is allowed to split the value of the expenses
stated in the income statement over several months instead of a one–time booking.
However, the amount of goodwill is subject to a goodwill impairment test at least once per year.
The companies have to verify at least once a year if the value of their assets is aligned with the fair
value of the market.
The test verifies if the value of the assets is bigger than the market value. An adjustment is recorded
in order to bring the value of the asset at the fair value in case of inequality.
References
Ausick, P (9 May 2014) 3.2 Billion for beats– is apple crazy? Assesed at 26 April 2015 from

:http://247wallst.com/consumer–electronics/2014/05/09/3–2–billion–for–beats–is–apple–crazy/
Business Goodwill. (n.d.). Retrieved 04 27, 2015, from Value Adder:
http://www.valuadder.com/glossary/business–goodwill.html
Doorn, van P (October 29, 2014) Don't wory about facebooks 18,1 billion in goodwill from
whatsapp.

Accounting
ukessays.com
http://www.ukessays.com/essays/accounting/accounting–goodwill.php
Free Essays – Accounting Essays
Accounting for Goodwill Under IFRS 3
In this essay I will be discussing the underlying problems with accounting for goodwill as a result of
business combinations, which will include the comparison between the requirements of FRS 10 and
IFRS 3 and also how this International standard affects the preparers and shareholders. IFRS 3
defines goodwill as: "future economic benefits arising from assets that are not capable of being
individually identified and separately recognised". The definition effectively confirms that the value
of the business overall is more than the sum of the accountable and identifiable net assets. ... Show
more content on Helpwriting.net ...
IFRS has changed the rules. IFRS 3 is introduced due to the rising significance of intangible assets
as an economic resource. As businesses in the UK turn into increasingly service–orientated,
intangible assets will make up a growing percentage of
the value of many acquired businesses. Nevertheless IFRS 3 is much more than an accounting
convention. The transparency promoted by this standard will allow analysts extraordinary insight
into the performance of the purchased business. Shareholders will be in a better position to
understand what they have actually got for their money. The implications for preparers are that they
must understand and be ready to meet the challenges that IFRS 3 signifies, by making sure they
have the necessary provisions in place such as training and equipment. One of the main concerns is
that measuring intangibles is not simply a one–off process. When a business is purchased, a process
known as a purchase price allocation is necessary to assign the purchase consideration across the
assets of the business. Only once the fair values are calculated for the intangibles, the preparers can
determine the extent of the goodwill. Business will now as a result have to carry out impairment
tests to check and, if necessary, correct the value of goodwill and long–life intangibles. For
example, if a

Persuasive Essay : Goodwill Best Place Ever
Goodwill Best Place Ever
Have you ever visited a public or private non–profit agency that addresses community issues once
in your life? As a matter of fact, we have a lot of choice, ranging from education, health, humanities
to general human services. I had an opportunity to go to Goodwill in Seattle, which is one of an
American nonprofit organization, so I can have a good chance to broaden my horizon regarding the
meaning of Goodwill. I remember the first time I visited Goodwill in Seattle. I could see a huge area
with a big blue banner "Goodwill" from far away. Going through the store, I saw a bunch of clothes
for kids and adults, household appliances, electronics for the kitchen. In addition, I recognized that I
could find anything at Goodwill, maybe it is not new, but it is good to use or recycle. Goodwill
Industries International Inc., or we can call it by its shortened name Goodwill, is an American
nonprofit organization that provides for approximately 10,349 people job training and support
including 2,642 young adults at Reach Center – based on Goodwill facts. Moreover, Goodwill also
hires veterans and individuals who lack of education, or experience, and those who against face
employment challenges.
Besides, according to the Goodwill facts, Goodwill has fund raising which raised $1.7 million in
charitable support, received a two–year grant from United Way Centers for Strong Families, and is a
membership in the Corporate Alliance Program grew to 19 partners in year three of the program.
Goodwill was founded in Boston by Edgar J. Helms who is a Methodist minister in 1902. When he
asked for help getting food and clothes, Helm took a bag and went to Boston's wealthy citizens. He
asked for whatever clothing they could spare instead of asking for money. The Goodwill store was
born when Helms hired people who were unemployable. They were willing to repair damaged items
and sell the donated goods. His saying was "A hand up, not a hand out". Helms opened Goodwill's
doors to anyone with the main purpose of finding people working with a willingness and became a
pioneer of an organization that gave people hope, dignity and dependence by "providing them with
the means to earn a paycheck and support

Accounting : The Differences Between U.s. Gaap And Ifrs-
Accounting for Business Combinations –Focusing on the differences between U.S. GAAP and
IFRS– I. INTRODUCTION Accounting for business combinations is one of the more complicated
processes in accounting. The basic idea can be quite simple. The assets and liabilities being acquired
are recorded at fair value and the fair value of the consideration transferred is allocated to them, but
there are many problems that can occur that make consolidating financial statements quite difficult
to accomplish. In this research paper some of the simpler accounting for business combinations will
be discussed. Specifically I will discuss the accounting for a 100% ownership acquisition for which
the subsidiary is dissolved. The procedures that will be discussed will correspond to the accounting
for these situations that must be performed on the date of acquisition. There are much more
complicated instances of business combinations in which multiple problems can cause the
accounting to be much more complicated, such as cases in which there is less than 100% ownership
of a subsidiary or when the accounting must be performed for reporting after the year of acquisition,
but these will not be discussed here. Instead this research paper will spend time detailing the
acquisition method for the aforementioned situation; this paper will also contain discussion of the
authoritative texts for business combinations for both United States generally accepted accounting
standards (henceforth referred to as

Goodwill Industries Essay
Goodwill Industries International
Each organization has its own structure, and breaks down the different sections of the organization
based on that structure to best help the clients. Goodwill is no different. Goodwill's organizational
structure allows them to communicate from people at the top of the organization down to each store
level. In any organization it is important for the organization to have some sort of structure to
operate daily.
Organizational Structure
Goodwill's organizational structure is hierarchically they are connected through the chain of
command. Goodwill has 13 different organizations and each is run under their own umbrella. Each
organization is governed by a voluntary board of directors. Each Goodwill ... Show more content on
Helpwriting.net ...
GSC provides training skills to meet the requirements the employer looks for. The most popular
skills are the opportunities in health care, retail, banking, and food service. These are just a few to
mention. Local employers are seeking trained employees and Goodwill have skilled client's ready to
be employed. Community involvement means a great deal to Goodwill and the community.
Goodwill's contract labor to the Military, General Motors, and Briggs, and Stratton, Last year, 2011
the Goodwill generated $641 million in contracted work worldwide. No job is too large or too small.
Goodwill partnering is an established fundamental for any community. The Goodwill of Southern
California: Transforming lives through the power of work ("Goodwill Industries International, Inc.,"
2012).
The Business Culture of GSC
Culture is an observable, powerful force in any organization. "Made up of its members' shared
values, beliefs, symbols, and behaviors, culture guides individual decisions and actions at the
unconscious level. As a result, it can have a potent effect on a company's well–being and success"
(One Page, n.d.).
The business culture of an organization sets the tone and the management leader is the prime
example. The GSC based in Southern California and the persons who live there make the
contributions to the organizational culture. This is

Essay On Acquisition Premium
Acquisition premium is defined as the amount the acquirer paid, which is higher than the fair value
of the target company (AASB 3). In the case of the public companies, the acquisition premium is
calculated as a percentage of the market capitalization of the target before the transaction is
announced. Several factors explaining for the existence of acquisition premiums, synergies and
control premium are most commonly identified. Synergies arise when the value of the combined
business is larger than the sum of the values of individual business that would be achieved if not
combined. Synergies can be classified into two classes; one is operational synergy and another is
financial synergy. Operational synergies have effects of reducing ... Show more content on
Helpwriting.net ...
Goodwill on acquisition need to be amortized and recognized as an expense on a straight line base
in the profit and loss statement, during the whole period from the date of acquisition to the end of
period benefits are expected to arise. According to AASB 1013, goodwill must be measured as the
excess beyond the acquisition expenditure over the fair value of the identifiable asset. In order to
determine the amount of goodwill on acquisition, the purchaser needs to recognize the fair value of
all the identifiable assets acquired and the purchase consideration. Fair value of net identifiable
assets equals the sum of company's share equity. Purchase consideration is the amount that the
acquirer is willing to pay for the target company. The goodwill on acquisition is the amount
difference between the purchase consideration and the fair value of company's identifiable assets.
However, the cost directly relate to acquisition such as legal fees, stamp duty and other government
charges, and professional fees need to be included to determine the cost of acquisition.
Similarity and difference between acquisition premium and goodwill Both acquisition premium and
goodwill arise from company combination when one company acquire another company by pay
higher price than what the fair value of the acquired company is. However, goodwill on acquisition
is an asset which show in the financial statement and the benefit of it could be

Accounting- Ida Impairment Essay
Ida U.S. Operations:
Ida Inc. (Ida) is a manufacturing company with operations in the United States and Spain. Ida is a
U.S. subsidiary of a U.K. entity and prepares its financial statements in accordance with U.S. GAAP
for reporting to its U.S.–based lender and in accordance with IFRS in reporting to its parent. Ida
owns and operates a commercial building that at year–end 2010 represents a a cash–generating unit
(CGU) under IFRS and a long–lived asset classified as held and used under U.S. GAAP. One of
Ida's competitors sold its commercial building for an amount significantly less than its asking price
in December 2010. The competitor's building is located across the street from Ida's building, has
approximately the same square footage, ... Show more content on Helpwriting.net ...
Ida should measure the impairment loss as the amount that the carrying value of the building
exceeds its fair value (ASC 360–10–35–17). Ida's impairment loss for the commercial building is
$600,000 (the carrying amount of the building– $4,500,000 minus its fair market value– 3,900,000).
Parent Company (IFRS)
* According to IAS 36.12 Ida should test for impairment when the asset's market value has declined.
Given the information provided that the competitor's sold their building for less than the asking
price suggests to management that the fair value of the building may have declined. An impairment
loss should be reported, "If, and only if, the recoverable amount of an asset is less than its carrying
amount, the carrying amount of the asset shall be reduced to its recoverable amount. That reduction
is an impairment loss" (IAS 36.59). IAS 36.74 states that the recoverable amount of a cash‐
generating unit is the higher of the cash‐generating unit's fair value less costs to sell and its value in
use. Ida's recoverable amount would be its value in use of $4,000,000. Therefore Ida should report
to its parent an impairment loss of $500,000 (Carrying value minus the Value in use).
Issue 2) Is goodwill associated with the Spanish operations impaired under U.S. GAAP and

A Synopsis of Accounting for Business Combinations
A SYNOPSIS OF ACCOUNTING FOR BUSINESS COMBINATIONS,
INTANGIBLES AND GOODWILL IMPAIRMENT
INTRODUCTION
During the 1980 's and 1990 's a great number of business mergers and acquisitions took place. The
generally accepted accounting principles to record the initial transaction and to account for the
acquired assets during their estimated useful lives this were well established.
Over time however, users of financial statements began to question whether those principles and
practices accurately reflected the market realities regarding the assets, their useful lives and their
contribution to a company 's value. In addition, intangible assets have become increasingly more
important as an economic resource.
It was apparent that ... Show more content on Helpwriting.net ...
SFAS 141 is based on the proposition that all business combinations are essentially acquisitions, and
thus all business combinations should be accounted for in a consistent manner with other asset
acquisitions.
FAS 141 begins with the declaration that the "accounting for a business combination follows the
concepts normally applicable to the initial recognition and measurement of assets acquired,
liabilities assumed or incurred...as well as to the subsequent accounting for those items."
A "business combination occurs when an entity acquires net assets that constitute a business or
acquires equity interest of one or more other entities and obtains control over that entity or entities."
In a combination effected through an exchange of cash or other assets it is easy to identify the
acquiring entity and the acquired entity. In a combination effected through an exchange of equity
interests, the entity issuing the equity interest is generally the acquiring entity. However, in some
business combinations, known as reverse acquisitions, it is the acquired entity that issues the equity
interests. (Paragraphs 15–19 offer guidance in this complex area.)
Generally,

Role Of Direct Marketing Strategy Of Goodwill
Direct Marketing
Direct marketing plays an important role in developing the IMC strategy of Goodwill Industries that
helps to raise awareness of customers as well as attract donation funds collection to the
organization. Goodwill has developed its direct marketing mainly through the direct mail campaign
and the website.
Direct Marketing to Clients
Known as direct mail campaign, Goodwill uses numerous direct mail postcards and the four–color
piece as well as ad brochures to send to its preferred customers to build store traffic in some areas.
Also, Goodwill creates a convenient website with informative and engaging data that helps client
easy access the organization's missions and key concepts. There is also a map on the main front
page for individual clients, who want to buy goods from the organization, to find their nearest local
Goodwill location. There is a link named "Donate and Shop", which provides some basic
instructions as well as the contact information for the shoppers to have further inquiry. Goodwill
also offers a separate website for customers to shop online through the auction format, where
customers can choose from a variety of used stuff such as clothing, books, electronics, musical
instruments or pet supplies. On the front page of this website, there are some pop–up promotions to
attract the shoppers' attention and notify them which promotions it is having.
For employees looking for a job, Goodwill has two separate pages called GoodProspects and

Galaxy Case Essay
| Deloitte & Touche LLC1 |
Memo
To: | Mary Stanford | From: | Ben Ji | Date: | September 26, 2012 | Re: | Goodwill Impairment Test | |
|
Galaxy Sports Inc. is a manufacturer of sports equipment. It is a public company with three
reporting units: Fitness Equipment, Golf Equipment, and Hockey Equipment. During our audit,
certain accounting treatments by Galaxy regarding goodwill impairment were found to possibly
contradict with the Accounting Standard Codification. Based on my research of the ASC, my
recommendations are that management should perform an interim goodwill impairment test at the
end of third quarter of fiscal year 2009; and that management should not carry forward the 09
goodwill impairment test for Fitness ... Show more content on Helpwriting.net ...
It is reasonable to say that fair value of reporting units have fallen significantly in pace with market
capitalization, and it has possibly fallen below book value of the reporting units. Therefore, above
analysis raises substantial doubt on management's action to carry forward the 09 fair values of
Fitness and Hockey. They should not carry forward the previous fair value estimates and should
revalue Fitness and Hockey for 2010.
Another argument refuting the decision to carry forward 2009 values finds its root in the ASC.
According to ASC 350–20–35–29, only when all of the three criteria below are met may a company
carry forward fair value determinations. The criteria are: a) assets and liabilities of the unit should
not have changed significantly. Hockey and Fitness seem to meet this criterion. b) The last fair value
determination of the unit should be substantially larger than their carrying amount at the time.
Hockey and Fitness meet this criterion. c) The likelihood that the current fair value is less than the
carrying amount should be low4. Hockey and Fitness's current fair value is possibly less than their
carrying amount, not meeting this criterion. Because not all of the criteria for a fair value carry
forward are met, the fair value of Hockey and Fitness may not be carried forward from 09.
It is important to note the limitations of the analysis. First, fair value estimates are subject to
professional judgment and errors

Jackson Enterprises Case
Xinyun Zhang
ACCT325
Individual Case
Goodwill Impairment at Jackson Enterprises Case
1. When is a company required to perform the two–step test for goodwill impairment? Explain in
your own words and provide citation from the ASC.
Goodwill is considered impaired when the implied fair value of goodwill in a reporting unit of a
company is less than its carrying amount, or book value, including any deferred income taxes. By
qualitative factors, if the fair value is less than its book value (likelihood more than 50%), two step
of the goodwill impairment test is necessary. According to ASC 350–20–35–2 and
3(A&B&D), if the company determines that it is not more likely than not that fair value is
less than the book value, it does ... Show more content on Helpwriting.net ...
| ASC 350–20–35–3C(a) | The stock price decreased from $27 to $23 in 2014. | ASC 350–20–35–
3C(e) |
ZD Qualitative Factors | Citation | Because of the enhancement of the competitive advantage of our
nation's farmers and ranchers, the government creates a business– friendly atmosphere for the
company. This could decrease operation cost. The government may give some grants to help
company. | ASC 350–20–35–3C(b) | ZD will dominate its competitors in manufacturing process
management which results in a cost advantage, as long as the patent is approved for manufacturing
process. | ASC 350–20–35–3C(c) | ZD has reduced its utility costs by 15% for two years. Due to
these utility cost reduction, ZD earns a state–administered manufacturer energy savings incentive
subsidy. | ASC 350–20–35–3C(c) |
According the above assessment of qualitative factors for both companies, I think that the goodwill
impairment test is necessary for Dynamic because Dynamic has many negative impacts. Although
the Dynamic has 3% of gross profit margins over competitors, it was not enough to offset the
negative impacts; I think that the goodwill impairment test is not necessary for ZD. Due to ZD
shows all positive impacts improving operation condition.
3. Based upon the information in the case, should Dynamic and ZD be combined or separated for

Fosters Case Study: Valuation and Impairment of Goodwill

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