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 Samson’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 ……………………. $5,000,000 Fair value of Samson’s identifiable net assets excluding goodwill ………. $4,500,000 Costs that would be incurred to sell the shares of Samson ………………… $ 200,000 Present value of future cash flows from continuing to control Samson ….. $4,750,000
A. What amount of goodwill should be reported from the acquisition of Samson under IFRS/GAAP?
B. At what amount should Samson’s identifiable net assets and goodwill be reported on Bartholomew’s consolidated balance sheet at the end of Year 1 under U.S. GAAP and IFRS?
Bartholomew Corporation acquired all of the outstanding shares of Samson Company in Year 1 by paying $6,875,000 in cash
So purchase consideration = $ 6875000
The fair value of Samson’s identifiable net assets is $5,000,000.
So Net Assets = $ 5,000,000
A. What amount of goodwill should be reported from the acquisition of Samson under IFRS/GAAP?
Calculation for the value of Goodwill is as under
| Particular | Amount in $ |
| Purchase Consideration | 6875000 |
| Net identifiable assets | 5000000 |
| Goodwill | 1875000 |
B. At what amount should Samson’s identifiable net assets and goodwill be reported on Bartholomew’s consolidated balance sheet at the end of Year 1 under U.S. GAAP and IFRS?
Both IFRS and US GAAP Net Intangible Assets and Goodwill will recorded as follow
5000000-4750000 = 250000
| Net identifiable assets | 5000000 |
| Less: | |
| Present value of future cash flows from continuing to control Samson | 4750000 |
| Total | 250000 |
| Goodwill | 1875000 |
| Less: | 250000 |
| 1625000 |
