All amounts are in millions. Invensus Corporation, headquartered in Germany, acquired Clearline Systems on January 1, 2016. Total acquisition cost was 60,000. Clearline's book value at the date of acquisition was 5,000. Clearline's reported assets and liabilities are on its books at amounts approximating fair value, but Invensus determined that Clearline had previously unreported in-process R&D and developed technology. Valuation of previously unreported identifiable intangible assets is based on the three-year strategic plan plus estimated terminal value. Below is information on projected cash flows for the in-process R&D and the developed technology as of January 1, 2016. All cash flows are assumed to take place at the end of the year for purposes of valuation.

All cash flows after 2018 are assumed to grow at a rate of 5% each year, indefinitely, based on the 2018 forecast (e.g., if the 2018 cash flow forecast is 100, cash flow for 2019 is 105, for 2020 is 110.25, etc.). Invensus uses a risk-adjusted discount rate of 20% to value in-process R&D, and a rate of 15% to value the developed technology. Round all answers to the nearest million. Required

a. Compute the fair values of Clearline's in-process R&D and developed technology.

b. Compute the amount of goodwill recognized for this acquisition.

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Year In-process R&D Net cash inflow 400 2016. 2017. 2018. Developed technology Year 2016..... 2017.... 2018. 450 350 Net cash inflow 1,500 2,000 2,100