LO4, 5 56. Assignment of fair values and the [A] entry On June 3, 2016, Shire ple acquired all of the outstanding common stock of Baxalta, Inc. for $18.00 per share in cash and shares of Shire common stock, amounting to a total purchase price of approxi- mately $32 billion. Shire 's December 31, 2016 annual report summarized the assignment of fair values to net assets as follows (in millions) SHIRE PLC XALTA, INC Preliminary fair values as of Measurement Preliminary fair values as of December 31, 2016 period adjustments (In millions) June 3, 2016 ASSETS Current assets: Cash and cash equivalents Accounts receivable 583.2 S 583.2 1,071.7 5,341.1 673.3 1,069.7 (2.0) (1,447.7) (97.3) Inventories 3,893.4 Other current assets. 576.0 (1,547.0) (235.0) Total current assets 6,122.3 7,669.3 Property, plant and equipment Investments 5,687.7 128.2 5,452.7 128.2 Goodwill 6,106.4 5,316.0 11,422.4 Intangible assets Currently marketed products In-Process Research and 21,995.0 24,550.0 (2,555.0) (2,210.0) (30.0) Development IPR&D") Contract based arrangements 2,940.0 730.0 72.2 42.2 Other non-current assets 103.3 51.7 155.0 Total assets. $47,257.1 $(1,209.3) $46,047.8 LIABILITIES Current liabilities Accounts payable and accrued expenses Other current liabilities $ 1,321.9 $1,283.9 38.0 241.0 113.4 354.4 Long-term borrowings and capital lease obligations Deferred tax liability Other non-current liabilities. 5,424.9 5,424.9 6,831.7 1,092.1 (1,386.4) 5,445.3 1,103.6 11.5 Total liabilities $14,873.6 $(1,223.5) $13,650.1 Preliminary fair value of identifiable assets acquired and liabilities assumed.. . $32,397.7 $32,383.5 14.2 Consideration Preliminary fair value of purchase $32,397.7 consideration. . $32,383.5 14.2 Related to the Baxalta acquisition amounts that will appear in the [A] consolidation entry on that date? Assume none of the intangible assets were reported on Baxalta's pre-acquisition balance sheet Prepare the [A] consolidation entry to recognize the intangible assets on the consolidated balance sheet at December 31, 2016 are the preliminary values as of December 31, 2016 the b. With respect to the measurement period adjustments, what are the primary factors that caused Goodwill to increase more than $5 billion between June 3 and December 31, 2016? Describe the logic of the transfer between these account categories. c. LO4, 5 56. Assignment of fair values and the [A] entry On June 3, 2016, Shire ple acquired all of the outstanding common stock of Baxalta, Inc. for $18.00 per share in cash and shares of Shire common stock, amounting to a total purchase price of approxi- mately $32 billion. Shire 's December 31, 2016 annual report summarized the assignment of fair values to net assets as follows (in millions) SHIRE PLC XALTA, INC Preliminary fair values as of Measurement Preliminary fair values as of December 31, 2016 period adjustments (In millions) June 3, 2016 ASSETS Current assets: Cash and cash equivalents Accounts receivable 583.2 S 583.2 1,071.7 5,341.1 673.3 1,069.7 (2.0) (1,447.7) (97.3) Inventories 3,893.4 Other current assets. 576.0 (1,547.0) (235.0) Total current assets 6,122.3 7,669.3 Property, plant and equipment Investments 5,687.7 128.2 5,452.7 128.2 Goodwill 6,106.4 5,316.0 11,422.4 Intangible assets Currently marketed products In-Process Research and 21,995.0 24,550.0 (2,555.0) (2,210.0) (30.0) Development IPR&D") Contract based arrangements 2,940.0 730.0 72.2 42.2 Other non-current assets 103.3 51.7 155.0 Total assets. $47,257.1 $(1,209.3) $46,047.8 LIABILITIES Current liabilities Accounts payable and accrued expenses Other current liabilities $ 1,321.9 $1,283.9 38.0 241.0 113.4 354.4 Long-term borrowings and capital lease obligations Deferred tax liability Other non-current liabilities. 5,424.9 5,424.9 6,831.7 1,092.1 (1,386.4) 5,445.3 1,103.6 11.5 Total liabilities $14,873.6 $(1,223.5) $13,650.1 Preliminary fair value of identifiable assets acquired and liabilities assumed.. . $32,397.7 $32,383.5 14.2 Consideration Preliminary fair value of purchase $32,397.7 consideration. . $32,383.5 14.2 Related to the Baxalta acquisition amounts that will appear in the [A] consolidation entry on that date? Assume none of the intangible assets were reported on Baxalta's pre-acquisition balance sheet Prepare the [A] consolidation entry to recognize the intangible assets on the consolidated balance sheet at December 31, 2016 are the preliminary values as of December 31, 2016 the b. With respect to the measurement period adjustments, what are the primary factors that caused Goodwill to increase more than $5 billion between June 3 and December 31, 2016? Describe the logic of the transfer between these account categories. c
