Question

Data: Use SEC EDGAR or another resource to obtain financial statements and notes for the following firms and fiscal year-ends. You can use their 10-K’s or annual reports.

Company	Exchange: Ticker	Fiscal year end
Amgen	NASDAQ: AMGN	December 31, 2017
Dollar Tree	NASDAQ: DLTR	February 3, 2018

2. How does Amgen account for research and development costs?
3. In 2015, Amgen acquired Dezima Pharma B.V. for total consideration of $410 million. What would Amgen’s goodwill balance have been on December 31, 2017 if the total consideration was only $330 million. Assume no other changes (e.g., same ‘Currency translation adjustments’ in Note 12
4. What identifiable intangible assets do Amgen and Dollar Tree report in the notes to their financial statements? List them.
   

Answer 1

Ans. Account Research and development cost - Research and development costs are general expenses which are research and development. These expenses are collection of expenses used for research like cost of paper, internet resources used, cost or rent of journals and books purchased, cost of conduct surveys (prepare questionnaire) and some of tools related with development of business. Research and development cost of Amgen for 2017 is $3562.

Calculate goodwill for amzen in year 2017

goodwill = Purchase consideration of target company - (Fair value of assets + Fair Value of Liabilities)

Purchase consideration = $330,000,000

Total assets = 79,954

Fair value of assets = 41604

Total current liabilities = 9020

Fair value of liabilities = 554

Goodwill = $330,000,000 - ( 9020 + 554 ) = $329,990,426

Use of intangible assets

Intangible assets are used for calculate fair value of assets. These are non-touchable assets like brand name, trade mark and patents. These are the important and unique for Amgen. Any other company can not use brand name and trade mark of one's company. According to balance sheet of Amzen current assets are $49,476, but when added intangible assets and goodwill , total assets are = $79,954 (for 2017). intangible assets plays a vital role for company's growth, because these make company a unique and entity. For example people know apple from its brand name and mark will helpful for increase revenue. total assets are collection of tangible and intangible assets

Intangible assets are

1. Goodwill

2. Patients

3. brand name

4. trade marks

5. copy rights