Borland Software Corporation Case Study

Concepts

A) Intangible assets are operational assets that lack physical substance. However, the future economic benefits that are derived from intangible assets are usually less certain than tangible operational assets. Due to this uncertainty, the valuation of these assets rely upon multiple estimations, therefore the reliability of the information may not be as accurate. Additionally, the relevance of the data in the decision making process comes into question since the future benefits are unknown. Copyrights, franchises, goodwill, patents, and trademarks are just a few examples of intangible assets.
Under Generally Accepted …show more content…

iv) Cash 13,482 Accounts Receivable 4,199 Other Current Assets 1,210 PPE 902 Deferred Tax 17,835 Goodwill 65,528 Developed Technology 23,400 IPR&D 4,800 Customer Relationships 7,500 Trademarks 1,000 Non-compete Agreement 300 Maintenance Agreement 11,300 Deferred Revenues 9,042 Deferred Tax Liabilities 17,835 Other Long Term Liabilities 1,464 Cash 115,939

v) On the cash flows statement, an outflow of $115,939 million is reported for the acquisition. This amount is different because the statement of cash flows only reports the amount of cash that actually changes hands.

H) i) Based strictly upon the figures on Borland’s financial statements, it seems as though the company has had a record of poor financial performance from the years 2005 to 2007. The company’s net income reported an increasing loss in all three years ($29,832 in 2005, $51,953 in 2006 and $61,673 in 2007). Also, according to the Borland’s balance sheet more than half of the company’s assets are either goodwill or intangibles. Since these intangible assets have a more uncertain economic benefit than other tangible assets, the financial condition is not as strong as it initially seems on the balance sheet. However, a closer inspection of the financial