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Facebook, Inc. acquired a technology startup for $1.2 billion during the year, resulting in goodwill recognized on its balance sheet. The company provided the following
- Facebook, Inc. acquired a technology startup for $1.2 billion during the year, resulting in goodwill recognized on its balance sheet. The company provided the following financial figures:
- Goodwill Recognized: $800 million
- Total Assets: $100 billion
- Total Liabilities: $50 billion
- Net Income (before acquisition): $15 billion
- Requirements:
- Calculate the total consideration paid for the acquisition, including any contingent payments.
- Prepare a balance sheet reflecting the goodwill recognized and adjusted total assets.
- Analyze the impact of goodwill on Facebook's financial ratios, including debt-to-equity ratio and return on equity (ROE).
- Discuss the impairment testing requirements for goodwill in Facebook's financial statements.
- Evaluate the strategic rationale behind Facebook's acquisition and its potential synergies.
- Goodwill Recognized: $800 million
- Total Assets: $100 billion
- Total Liabilities: $50 billion
- Net Income (before acquisition): $15 billion
- Calculate the total consideration paid for the acquisition, including any contingent payments.
- Prepare a balance sheet reflecting the goodwill recognized and adjusted total assets.
- Analyze the impact of goodwill on Facebook's financial ratios, including debt-to-equity ratio and return on equity (ROE).
- Discuss the impairment testing requirements for goodwill in Facebook's financial statements.
- Evaluate the strategic rationale behind Facebook's acquisition and its potential synergies.
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