Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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VMware, Inc. is a subsidiary of Dell Technologies Inc.. providing customers with IT resource management. In fiscal 2020, VMware acquired Avi Networks, Inc., a provider of multi-
cloud application delivery services, for $335 million. This price reflected goodwill of $228 million and identifiable intangible assets of $94 million. Assume that VMware paid the
acquisition price in cash, and also incurred $10 million in acquisition-related legal and advisory services, paid in cash.
Required
a. What was the fair value of tangibile net assets, if any, that VMware recognized at the date of acquisition?
Note: Provide all answers in millions,
million
b. Prepare the journal entry to record this business combination.
Debit
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Jonas Tech Corporation recently acquired Innovation Plus Company. The combined firm consists of three related businesses that will serve as reporting units. In connection with the acquisition, Jonas requests your help with the following asset valuation and allocation issues. Support your answers with references to FASB ASC as appropriate.Jonas recognizes several identifiable intangibles from its acquisition of Innovation Plus. It expresses the desire to have these intangible assets written down to zero in the acquisition period.The price Jonas paid for Innovation Plus indicates that it paid a large amount for goodwill. However, Jonas worries that any future goodwill impairment may send the wrong signal to its investors about the wisdom of the Innovation Plus acquisition. Jonas thus wishes to allocate the combined goodwill of all of its reporting units to one account called Enterprise Goodwill. In this way, Jonas hopes to minimize the possibility of goodwill impairment because a decline…
The following information relates to Question 2 and 3:
On July 1, 2018, Gene Parmesan's Genes Company paid $16,500,000 cash and signed a $7,500,000 note payable (due in 3
months) to acquire in-process R&D from another company. They are planning to use the assets acquired for research and
development in their GMB (Genetically Modified Broccoli) division. The assets can be used for other research and development
projects as well. They plan to use the assets purchased for 10 years and believe they can sell them for $1,500,000 at the end of
those 10 years.
From July 1 through Dec. 31, 2018, Genes Co. spends $6,000,000 (palid in cash) on scientist salaries and broccoll plants to use in
the purchased R&D project. Genes Co. also amortizes any capitalized assets on a straight-line basis.
REQUIRED: Write the journal entry related to the acquisition that Genes Co. should record on July 1.2018.
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