1. Bartholomew Corporation acquired all of the outstanding shares of Samson Company in Year 1 by paying $6,875,000 in cash. The fair value of Samsonâ€™s identifiable net assets is $5,000,000. Samson is a separate cash-generating unit and reporting unit. At the end of Year 1, Bartholomew compiles the following information for Samson:
Amount at which the shares of Samson could be sold â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦. $5,000,000
Fair value of Samsonâ€™s identifiable net assets excluding goodwill â€¦â€¦â€¦. $4,500,000
Costs that would be incurred to sell the shares of Samson â€¦â€¦â€¦â€¦â€¦â€¦… $ 200,000
Present value of future cash flows from continuing to control Samson â€¦.. $4,750,000
A. What amount of goodwill should be reported from the acquisition of Samson under IFRS/GAAP?
B. At what amount should Samsonâ€™s identifiable net assets and goodwill be reported on Bartholomewâ€™s consolidated balance sheet at the end of Year 1 under U.S. GAAP and IFRS?
2. As of December 31, 2012, NPR, Inc. has patents and trademarks on its balance sheet. NPR has decided it does not want to use the qualitative assessment option for impairment testing on its trademark for US GAAP. Neither asset has been previously impaired. Information for these assets as of December 31, 2012, is as follows:
value Selling costs
Patent 10 years $200,000 $100,000 $80,000 $2,000 $85,000 $95,000
Trademark Indefinite $250,000 â€“ $225,000 Insignificant $220,000 $240,000
As of December 31, 2013, the fair value, selling costs and the present value of future cash flows of the patent had not changed. The sum of future undiscounted cash flows for the patent is now $90,000. The fair value of the trademark had increased to $230,000 and the present value of the future cash flows for the trademark has increased to $225,000. Selling costs are still insignificant. The sum of future cash flows is still $240,000.
Please provide any necessary calculations and journal entries for these assets on NPR Inc.â€™s balance sheet using both IFRS and US GAAP for 2012 and 2013.
* Amortization has already been recorded for 2012.
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