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Pushdown Accounting Brightcove, Inc. acquires all of the stock of Ciber, Inc. for $80 million in cash and accounts for the acquisition as a stock acquisition. Balance sheet information at the date of acquisition is as follows (in thousands): Brightcove, Inc. Ciber, Inc. Book Value Book Value Fair Value Dr (Cr) Dr (Cr) Dr (Cr) Current assets $40,000 $400 $250 Plant and equipment, net 200,000 12,000 5,000 Licenses and trademarks 5,000 8,000 Investment in Ciber 80,000 Current liabilities (80,000) (800) (800) Long-term liabilities (150,000) (10,000) (9,500) Capital stock (35,000) (8,000) Retained earnings (55,000) 1,400 Total $0 $0 Brightcove hires a consultant to identify and value any previously unreported intangible assets attributable to Ciber at the date of acquisition. The consultant identifies the following intangibles: Fair Value (in thousands) Customer contracts $2,000 Assembled workforce 25,000 Brand names 3,000 Leases at rents below current market 500 Developed technology 200 In-process research and development 1,000 Future cost savings from elimination of duplicate assets 400 Additional expected revenues from bundling products 800 Assume Ciber uses pushdown accounting as of the date of acquisition. Required a. Prepare the entry Ciber makes on its own books at the date of acquisition (in thousands). Description Debit Credit Licenses and trademarks Long term liabilities Customer contracts Brand names Favorable leases Developed technology In-process R&D Current assets Plant and equipment, net N $ b. Prepare a working paper to consolidate the balance sheet accounts of Brightcove and Ciber at the date of acquisition. Use negative signs with your Cr (credit) balance answers in the Dr(Cr) columns (not in the Eliminations Credit column). Consolidation Working Paper Accounts Taken From Books Eliminations Brightcove Ciber Consolidated (in thousands) Dr(Cr) Dr(Cr) Debit Credit Balances Dr(Cr) Current assets $ Plant and equipment, net Licenses and trademarks Investment in Ciber (E) Customer contracts Brand names Favorable leases Developed technology In-process R&D Goodwill Current liabilities Long-term liabilities Capital stock (E) Pushdown capital (E) Retained earnings Total $ $ $ $ $ $ c. Prepare the consolidated balance sheet at the date of acquisition, in good form. Brightcove, Inc. and Subsidiary Consolidated Balance Sheet Date of Acquisition in thousands) Assets Liabilities Current assets $ Current liabilities $ Plant and equipment, net Long-term liabilities Licenses and trademarks Total liabilities Other identifiable intangible assets Goodwill Shareholders' equity Capital stock Retained earnings Total equity Total assets Total liabilities and equity $ $
