Question
Identifiable Intangibles and Goodwill, U.S. GAAP International Foods, a U.S. company, acquired two companies in 2019. As a result, its consolidated financial statements include the
Identifiable Intangibles and Goodwill, U.S. GAAP
International Foods, a U.S. company, acquired two companies in 2019. As a result, its consolidated financial statements include the following acquired intangibles:
Intangible Asset | Date of Acquisition | Fair Value at Date of Acquisition | Useful Life |
---|---|---|---|
Customer relationships | January 1, 2019 | $4,000,000 | 4 years |
Favorable leaseholds | June 30, 2019 | 8,000,000 | 5 years |
Brand names | June 30, 2019 | 18,000,000 | Indefinite |
Goodwill | January 1, 2019 | 500,000,000 | Indefinite |
Goodwill was assigned to the following reporting units:
Asia | $100,000,000 |
South America | 150,000,000 |
Europe | 250,000,000 |
Total | $500,000,000 |
It is now December 31, 2020, the end of International Foods accounting year. No impairment losses were reported on any intangibles in 2019. Assume that International Foods bypasses the qualitative option for impairment testing of goodwill and indefinite-life intangibles. Additional information at December 31, 2020 is as follows:
Intangible Asset | Sum of Future Expected Undiscounted Cash Flows | Sum of Future Expected Discounted Cash Flows |
---|---|---|
Customer relationships | $1,200,000 | $900,000 |
Favorable leaseholds | 6,000,000 | 4,400,000 |
Brand names | 14,000,000 | 7,000,000 |
Reporting Unit | Unit Carrying Value | Unit Fair Value |
---|---|---|
Asia | $300,000,000 | $400,000,000 |
South America | 200,000,000 | 350,000,000 |
Europe | 600,000,000 | 500,000,000 |
Required
Compute 2020 amortization expense and impairment losses on the above intangibles, following U.S. GAAP.
Enter answers in millions, using decimal places when applicable.
(in millions) | |
---|---|
Amortization expense - identifiable intangibles | $Answer |
Impairment losses - identifiable intangibles | Answer |
Goodwill impairment loss | Answer |
Total | $Answer |
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