1. a. Though NDS is not a separate company, it’s a business and Microsoft is the primary beneficiary of this business. Microsoft acquired “substantially all” of NDS, in the other word, Microsoft had control over NDS and it bought both NDS’ assets and liabilities. According to ASC Paragraph 805-10-25-01, this transaction qualifies as a business combination. Hence Microsoft should apply acquisition method. b. Assets and liabilities reported as business combination and purchase can have substantial differences on acquirer’s financial statements. For instance, when Microsoft acquired NDS, it will be able to report some intangible assets. Examples would be technology-based, contract-based, customer-related and marketing-related. Those are identifiable …show more content…
Microsoft must make judgments on estimation of the long-term rate of growth for the business, estimation of the useful life over Phone Hardware segment, and determination of weighted average cost of capital. d. Technology-based and contract-based is major identifiable intangible assets of the Phone Hardware segment. Each of these intangible assets has different useful lives. It’s necessary to estimate their fair value to calculate their amortization and test for impairments. Yes, Microsoft is required to measure these fair values at least annually. The fair values of these intangible assets are used to test the impairment for the reporting unit. If Microsoft used IFRS to report its financial results, it would only require the intangibles that are traded in an active market to measure the individual fair values in determining goodwill impairment. 3. The 20 million of stock awards is the payment for the services already performed. Therefore, it’s part of acquisition cost. According to ASC Paragraph 805-30-30-12, Expedia should allocate the stock awards in both performed services and postcombination services. Therefore, the rest of 106 million stock awards are the compensation payments for future services that will be provided after the …show more content…
The gain or loss on conversion is reported on the consolidated statement of comprehensive income. In 2013, it is a loss. The amount is shown in a separate line as foreign currency translation. CCHBS’s FX exposure from the Belarus subsidiary was a net liability exposure. Belarus is under hyperinflation, the value of Belarusian ruble has been inflated significantly over last three years. CCHBS would want to hedge in a short position to reduce the risk that Belarusian ruble will fall in value against the euros. 8. Danske’s goodwill impairment tests were carried out under assumptions that contain many unforeseeable factors and increased capital allocation to Finland and Northern Ireland. According to 2015 annual report, footnote 18, the Eurozone is experiencing unusual low short-term interest rates, which has a great negative effect on Danske’s margins. Danske expects their profit to keep growing in next few years. Therefore, Danske always mentions “net profit before goodwill impairments”, they do not want 2015’s uncertain assumptions impact their financial
The facts of the case according to Judge Jackson show that Microsoft was violating the Sherman Antitrust Act. They were in the process of doing so by allegedly maintaining a monopoly power by anticompetitive means as well as attempting to monopolize the Web browser market. Microsoft was also accused of forcefully attaching its Internet Explorer Web browser to its windows operating system. They were also accused of making marketing arrangements with other companies, such as Apple, which were constituted unlawful exclusive dealings. These action by Microsoft were in violation of both section 1 and 2 of the Sherman Antitrust Act.
The purpose of this paper is to attempt to recompile information about the merger of two corporations; one of many taking places i...
Lowe's Home Improvement counted intangible assets in their acquisitions section. The total amount of intangible assets was $1,413,000,000. Intangible asset types at Lowe's Home Improvement include trademarks, dealer relations, goodwill, and other assets.
The hierarchy of fair value consists of three level, and level one is considered as the highest level. Level one is Price traded that are unmodified within the active markets for assets or liabilities which correspond to the entity so that the Commission could find them at the measurement date. The second level is an inputs with different prices from included in the first level one, where they are through which assets and liabilities are monitoring a straightforward manner and are (prices) or indirectly and is (derivatives prices). The third level is the unobservable inputs for the asset or
Managing conflict is a difficult task that we all face, but becoming aware of your own characteristic style could help determine why conflicts result exactly the way they do. It helps determine what is a healthy outcome. Each circumstance is different.
...ciates its assets on a straight line basis. Both IAS 16 and GAAP, depreciates assets over its expected useful life.
Microsoft was able in the OS segment to double their revenue per PC when Windows 3.x emerged which still needed MS-DOS to run. Most of the sales Microsoft made were to OEMs who would take the additional step of installing Windows on a computer’s hard drive. This strategy was effective in that the cost of production was relatively low, as an OEM may only need a single master copy to do the installation. The costs to Microsoft would largely be bore in R&D expense rather than production. As part of the Microsoft business model for this segment, Microsoft designed their OS to need periodic upgrades. The upgrades did come at a cost, and in essence, Microsoft was able to create an “annuity” stream for the Microsoft OS segment. In this segment, Microsoft had a monopolistic structure that allowed them to realize huge returns, especially during such a period of technological growth and rapid obsol...
The FAS has made changes throughout the years in the way to account for goodwill. Goodwill is when a company attempts to merge with another company to obtain the valuable intangible assets. These assets are anything that can 't be seen or touched. Valuable intangibles can be anything like a company name because it is well known. Many times companies will decide to merge because it can be beneficial to them to merge with well-known entities. This can also be less costly and less time-consuming versus building a brand new business on its own. On many occasions, gooodwill is amortized on accounting records. Amortization is not the most favorable approach for companies who are trying to attract investors. This because when amortization is not present in the books, it means that there aren 't high physical cash profits for shareholders.
Acquisition analysis includes determining consideration transferred, goodwill (or gain on bargain) and fair value of assets at the date of acquisition. When Woolly Ltd purchased Jumper Ltd; they paid more then the consideration transferred (fair value of assets less liabilities) of the entity, thus there was goodwill provided. Business combination valuation entries occur when assets or liabilities fair value differs from their carrying amount at the date of acquisition. As Jumper Ltd had assets with a higher fair value than carrying amount; there was reasoning for BCVR entries. Intragroup transactions come about through the transferal of assets or liabilities such as inventory or dividends from the subsidiary to the parent or visa versa (within the group). When Woolly Ltd and Jumper Ltd conduct intragroup transactions, as separate legal entities these transactions are recorded as normal however, from the point of the group these transactions are internal and therefore are not recognized by external users, thus the transactions must be eliminated. Finally, non-controlling interest occurs when the parent owns less than 100% of the subsidiary, however this is not relevant to Woolly Ltd as ownership of Jumper Ltd is 100%. These steps are
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.
The first two do not require the acquired business unit to be connected with the existing units; the second two depend on connection. Although the concepts are not always mutually exclusive, the way in which they generate value for the corporation is different for each. The portfolio management balances current business activities with new industry acquisitions. Its success is undervalued acquisition meets attractiveness and COE test. The challenges are: increased capital market competition, need for industry specific knowledge, and growth of the company and diversity. The restructuring seeks underdeveloped or sick companies and industries. Its successes are: utilize and pass the three tests and ability to find undervalued companies with growth potential. Its challenges are: restructurer exposed to more risk, time limit for success, hold onto a restructured company, and growing depletion of restructuring pool with increased competition. The transfer of skills involves activities important to competitive advantage. With transferring skills, business activities are similar enough that sharing knowledge would be meaningful. However, skills must be useful to key business activities and must be beyond competitors’ capabilities. The ability to share activities has been a potent basis for corporate strategy because sharing often enhances
People face conflicts every day of their lives. We all come across at least one incident in our lives that is challenging and we are baffled on what decision is to be made. Such conflicts may be an inner-conflict, a conflict between oneself and nature, a conflict between oneself and another person, oneself and God, or one and society. This paper will describe an incident in my life involving a conflict.
Goodwill definitions may be defined in two different ways: the residuum approach and the excess profits approach. In the residuum approach, goodwill is defined as the difference between the purchase price and the fair market value of an acquired company's assets. Goodwill is a leftover amount that cannot be identified, after a thorough investigation, as any other tangible or intangible asset. In the excess profits approach, goodwill is the difference between the combined company's profits over normal earnings for a similar business. Under this definition, the present value of the projected future excess earnings is determined and recorded as goodwill. This concept is very difficult to measure since future earnings have no certainty. Goodwill can arise in two different ways: It can be internally generated or it c...
In December of 2008 Microsoft decided to kill off Windows Mobile because it couldn’t compete with the iPhone and Android. They decided instead to develop Windows Phone a completely new mobile operating system. In October of 2010 Microsoft's first phones running Windows Phone was established, but the sales were low. The company was not coming up with a firm product to successfully sell to the consumer because it was not meeting the wants and need of them as well. Microsoft had to find a way to boost sales. Microsoft later decides to buy Nokia cell phone business for 5.4 billion euros or $7.2 billion. The two companies have had a development agreement since 2011. The combination of the two companies would help increase their sales on the Window Phones. Microsoft CEO said, “Clearly, greater success with phones will strengthen the overall opportunity for us and our partners to deliver on our strategy to create a family of devices and services for individuals and business.” (Zeman) Microsoft was determined to increase its strengths ...
Microsoft is the leading and the largest Software Company in the world. Found by William Gates and Paul Allen in 1975 Microsoft has grown and become a multibillion company in only ten years. It all started with a great vision – “a computer on every desk and every home” - that seemed almost impossible at the time. Now Microsoft has over 44,000 employees in 60 countries, net income of $3.45 billion and revenue of 11.36 billion. Company dramatic growth and success was driven by development and marketing of operational systems and personal productivity applications software.