INSTAPOWER FASB ASC AND IFRS RESEARCH CASE

On February 18, 2014, Q-Car Corporation announced its plan to acquire 90 percent of the outstanding 1,000,000 shares InstaPower Corporation's common stock in a business combination later in the year following regulatory approval. Q-Car will account for the transaction in accordance with ASC 805, Business Combinations.

On May 1, 2014, Q-Car purchased a 90 percent controlling interest in InstaPower's outstanding voting shares. On this date, Q-Car paid $60 million in cash and issued one million shares of Q-Car common stock to the selling shareholders of InstaPower. Q-Car's share price was $20 on the announcement date and $27 on the acquisition date.

InstaPower's remaining 100,000 shares of common stock are owned by a small number of investors who do not actively trade their shares. Using other valuation techniques (comparable firms, discounted cash flow analysis, etc.), Q-Car estimated the fair value of the InstaPower's noncontrolling shares at $11,000,000.

The parties agreed that Q-Car would issue to the selling shareholders an additional one million shares contingent upon the achievement of certain performance goals during the first 18 months following the acquisition. The acquisition-date fair value of the contingent stock issue was estimated at $10 million.

InstaPower has a research and development (R&D) project underway to develop a fast charging battery technology. The technology has a fair value of $14 million. Q-Car considers this R&D as in-process because it has not yet reached technological feasibility and additional R&D is needed to bring the project to completion. No assets have been recorded in InstaPower's financial records for the R&D costs to date.

InstaPower's other assets and liabilities (at fair values) include the following:

Cash $270,000

Accounts Receivable $800,000

Land $2,930,000

Building $19,000,000

Machinery $46,000,000

Trademark $8,000,000

Accounts Payable $(1,000,000)

Neither the receivables nor payables involve Q-Car.