P Co. recently acquired S Co. The combined firm consists of three related businesses that will serve as reporting units. In connection with the acquisition, P requests your help with the following assets evaluation and allocation issues. By using what you have learned in this course and with references to FASB ASC as appropriate. P recognizes several identifiable intangibles from its acquisition of S. It expresses the desire to have these intangible assets written down to zero in the acquisition method. The price P paid for S indicates that it paid a large amount of goodwill. However, P worries that a future goodwill impairment may send the wrong signal to the investors about the wisdom of the acquisition S. P thus wishes to allocate the combined goodwill of its reporting units to one account called Enterprise Goodwill. In this way, P hopes to minimize the possibility of goodwill impairment because of a decline in goodwill in one business unit could be offset by an increase in the value of goodwill in another business unit.

Instruction:

1. Please advise P about the acceptability in its immediate write-off its identifiable intangibles.

2. Indicate the relate factors to consider in allocating the value assigned to identifiable intangibles acquired in a business combination to expense over time.

3. Advice P on the acceptability of its suggested treatment of goodwill.

4. Indicate the relative factors to consider in allocating goodwill across an enterprises business units.