Question

Identifiable Intangibles and Goodwill, U.S. GAAP

International Foods, a U.S. company, acquired two companies in 2013. 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, 2013	$3,200,000	10 years
Favorable leaseholds	June 30, 2013	4,800,000	12 years
Brand names	June 30, 2013	14,400,000	Indefinite
Goodwill	January 1, 2013	400,000,000	Indefinite

Goodwill was assigned to the following reporting units:

Asia	$80,000,000
South America	120,000,000
Europe	200,000,000
Total	$400,000,000

It is now December 31, 2014, the end of International Foods' accounting year. No impairment losses were reported on any intangibles in 2013. Assume that International Foods bypasses step 0 of the goodwill impairment test. The following information is available on December 31, 2014:

Intangible Asset	Sum of Future Expected Undiscounted Cash Flows	Sum of Future Expected Discounted Cash Flows
Customer relationships	$960,000	$720,000
Favorable leaseholds	4,800,000	3,520,000
Brand names	11,200,000	5,600,000

Reporting Unit	Unit Carrying Value	Unit Fair Value
Asia	$240,000,000	$320,000,000
South America	160,000,000	280,000,000
Europe	480,000,000	400,000,000

Compute 2014 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

Answer 1

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non e Calculation of Depowing Luenes Identifiablo Intangibles Identifiable Jolangible, ang > customw, Rolalienuhin CCR) forceable Learehold (FL) y Brandname (BN) Intangible carrying u Adis canle Test Disainted Imperinnen valine Cashflow Cashflow truo 9,60, on 25,60. (VO CR FAO, OTO 18400ro 4,80,0000 42,10m Falre FL 36,20, on 1200000 true uomo BN 56,coin Totel Impairmone 5040000 Lars Frodentifiable or $5.04 million Test means Carrying & Undiscuted = true Counflow Carrying a undiscounted = faly value cashflow True means to be impaired. falso means not to be impared To benin ment Laws Carrying - písaninled valio o Caiflee 3200070 í

111 Calculation of Goodwill Impaviment Lawy Repaling Canying unil rais Test unil value value Asia 240000000 320000000 pese Goodwil Impanin South American 16000000 0 280000000 Pahre Cur pt 2000 000 0 900000000000 800000000 Total 800000000

Goodwill impainment = 200000000 or $20 million