Talbots Case Essay

456 Words2 Pages
BRIEF CASES HARVARD BUSINESS PUBLISHING 3254 OCTOBER 10, 2008 WILLIAM J. BRUNS The Talbots, Inc., and Subsidiaries: Accounting for Goodwill This cases talks the treatments of goodwill and intangible assets through an international specialty retailer and direct marketer of women’s apparel, Talbots, Inc., buying another multi-channel specialty retailer of women’s apparel, J. Jill. Based on the purchase on May 3, 2006, of J. Jill by Talbots, $518,320,000 was paid to shareholders of J. Jill in Cash. 21,551,767 shares of J. Jill were purchased by Talbots. The fair market value of assets that Talbots acquired from J. Jill was $687,572,000. Talbots was willing to pay more than the fair value of the tangible assets acquired from J. Jill, because J. Jill had intangible assets that worth some money. The liabilities assumed by Talbots in the acquisition of J. Jill were current liabilities of $55,662,000, deferred income taxes of $95,699,000, debt for this acquisition of $400,000,000 and other long-term liabilities of $11,820,000, which was $563,181,000 in total. Journal entries required when Talbots recorded the purchase of J. Jill ($ amounts in thousands) Debt Cash 400,000 Credit Debt 400,000 Credit Cash 524,391 Debt Deferred income taxes 30,445 Other current assets 19,475 Property and equipment 91,837 Goodwill 211,977 Trademarks 79,100 Other intangible assets 100,185 Credit Current liabilities 55,662 Deferred income taxes 95,699 Other long-term liabilities 11,820 For Fiscal Year 2007 (ending February 3, 2007), the amortization of goodwill and other intangible assets planned by Talbots when it purchased J. Jill on May 3, 2006 Goodwill will not be amortized and will be reviewed for impairment on an annual basis or when events indicate that the asset may be impaired. Accumulated amortizations for customer relationships,
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