Chapter 2 1 Introduction to Business Combinations and the Consolidation Proces On July 1,2014, Actavis ple acquired 100 percent of the common stock of Forest Laboratories, Inc. LO4 for cash and stock consideration totaling $27.661.1 million. The following excerpt is from Actavis' December 31,2014 SEC Form 10-K. ACTA LABORAT The following table summarizes the preliminary fair values of the assets acquired and labilities as- sumed at the acquisition date (n millions) Amounts as of September 30, 2014 Measurement Period Adjustments Amounts as of December 31, 2014 Cash and cash equivalents Accounts receivable $ 3,424.2 496.2 1,455.8 233.3 87.1 221.1 84.1 1,363.0 11,405.5 16,706.1 (1,346.0) (2,449.7) (661.5) 962) 3,261.9) $27,661.1 $ 3,424.2 496.2 1,455.8 261.2 87.1 221.1 84.1 1,362.0 11,515.5 16,385.3 (1,322.1) (2.302.9) (824.5) (120.0) (3,261.9) $27,661.1 Other current assets. Current assets held for sale Property, plant and equipment, net... Other long-term assets 27.9 ntangible assets Current liabilities.. .. Deferred tax liabilities, net Other taxes payable Other long-term liabilities Outstanding indebtedness 110.0 320.8) 23.9 146.8 37.0 (23.8) 0.0 Explain the meaning of the amounts relating to the acquired asset accounts. a. b. Actavis assigns $1,363.0 million of fair value to an account called "IPR&D intangible assets." To c. Briefly describe the manner in which the amount of $16,706.1 million relating to the Goodwill d. what does this account relate? Briefly describe what will happen to this account in the years after the acquisition. asset is determined Briefly describe why Actavis is making "Measurement Period Adjustments." Briefly describe how, under current GAAP, these adjustments will affect Actavis' quarterly financial statements for the three months ended December 31, 2014. Who is the investor? Why does it matter? Assume that we have an acquisition. But, we don't yet know who the investor is. Here are the facts: 38. LO1 Company A Company B