Acquisition with Stock Options

In December 2013, FireEye, Inc. acquired all of the outstanding shares of privately held Mandiant Corporation, a provider of computer security products, for $106,538,000 in cash and 16,921,000 shares of FireEye common stock with a fair value of $704,414,000 and a par value of $0.0001/share. In addition, Mandiants existing vested stock option and restricted stock awards were converted to awards denominated in FireEye stock, in the amount of 6,680,000 shares with a fair value of $86,703,000. These awards have the same terms as when they were issued by Mandiant. FireEye estimates that unvested equity awards relating to post combination services have a current fair value of $122,600,000. Out-of-pocket acquisition-related costs were $8,500,000. The following table summarizes the date-of-acquisition fair values of the identifiable net assets acquired.

Net tangible assets	$9,629,000
Identifiable intangible assets:
Developed technology	54,600,000
In-process research and development	1,400,000
Content intangibles	128,500,000
Customer relationships	66,000,000
Contract backlog	12,600,000
Trade names	12,400,000
Deferred tax liability	(90,105,000)
Identifiable net assets acquired	$195,024,000

FireEye describes the identifiable intangible assets acquired as follows:

Content intangibles represent threat intelligence, which is continually gathered from ongoing monitoring of endpoints and by incident response and remediation teams. The intangible assets attributable to customer relationships relate to Mandiants ability to sell existing, in-process and future versions of its products and services to its existing customers. Developed technology intangibles includes a combination of patented and unpatented technology, trade secrets, and computer software and process that represent the foundation for planned new products and services.

FireEye plans to amortize the developed technology over 46 years, the content intangibles over 10 years, customer relationships over 8 years, contract backlog over 13 years, and trade names over 4 years. Inprocess research and development has an indefinite life.

Required

Calculate the total acquisition cost reported by FireEye.

Enter answer in thousands (ex: $8,500,000 equals $8,500 in thousands).

$Answer

(in thousands)

How much goodwill was recognized for this acquisition?

Enter answer in thousands (ex: $8,500,000 equals $8,500 in thousands).

$Answer

(in thousands)

Prepare the journal entry FireEye would make if it recorded the combination as a merger. Round all numbers to the nearest thousand.

• Enter answers in thousands.
• Round answers to the nearest thousand, if applicable (ex: $6,436 equals $6 in thousands - rounded).

Description		Debit	Credit
Net tangible assets		Answer	Answer
Developed technology		Answer	Answer
In-process research and development		Answer	Answer
Content intangibles		Answer	Answer
Customer relationships		Answer	Answer
Contract backlog		Answer	Answer
Trade names		Answer	Answer
Goodwill		Answer	Answer
AnswerContingent consideration liabilityDeferred tax liabilityInvestment in MandiantMerger expensesShareholders' equity - Mandiant		Answer	Answer
AnswerContingent consideration liabilityDeferred tax liabilityInvestment in MandiantMerger expensesShareholders' equity - Mandiant		Answer	Answer
Common stock		Answer	Answer
Paid-in capital		Answer	Answer
Cash		Answer	Answer

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