A question for Advanced Accounting Ch2

timer Asked: Aug 26th, 2015

Question Description

On January 26,2010, Oracle Corporation acquired Sun Microsystems, Inc, for $7.295 billion, comprised of a cash payment of $7.196 billion and the issuance of Oracle stock options that replaced $0.099 billion of outstanding Sun Microsystems options. The footnote relating to this acquisition, which Oracle includes in its 2010 10-K, follows. Use this information to answer the following questions:

a. Oracle describes its assignment of fair values as "preliminary." Briefly describe the provision under GAAP for companies to use provisional amounts and the process by which those estimates can be adjusted.

b. Prepare the journal entry that Oracle made on the acquisition date.

c. Describe the process by which Oracle determined the assignment of fair value to Goodwill in the amount of $1,291 million.

d. Oracle assigned $3.347 billion of fair value to intangible assets subject to amortization. Describe the process by which the amount ascribed to the individual intangible assets is determined.

e. Oracle assigned $415 million of fair value to In-process Research and Development. Describe the nature of and prescribed accounting for these liabilities.

f. Oracle recognized certain Pre-Acquisition Contingencies as liabilities in its search for identifiable net assets. Describe the accounting for these liabilities.

g. Briefly describe the entry that Oracle makes in the consolidation process to remove the Equity Investment account from the parent-company balance sheet in preparation of the consolidated balance sheet.

Please answer the question by yourself. 

I can supply the ebook for CH2.

Thank you.

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