Earnings Contingency, In-Process R&D, Bargain Purchase
On January 2, 2012, Fiser, Inc. acquired Vixen Pharmaceuticals for $1.25 billion cash, in a statutory merger. Vixen had two promising products for treating common infections under review by the U.S. Food and Drug Administration. The balance sheets of Fiser and Vixen, immediately prior to the acquisition, are below. Fair value information appears for Vixen's reported assets and liabilities. $1 billion of the purchase price was allocated to previously unreported in-process research and development attributed to Vixen's products under development. The purchase price was low due to Vixen's poor performance in previous years—Vixen reported a retained earnings deficit of $2.15 billion as of the date of acquisition. To close the deal, Fiser agreed to pay the former owners of Vixen $2 for every dollar of total revenue above $30 million reported on sales of Vixen's products over the next two years. This payment, if made at all, would occur at December 31, 2013. Fiser expects that there is only a 10 percent chance the payment will be made, as follows:

Consolidated Balance Sheet Working Paper, Identifiable Intangibles, Goodwill
International Technology Inc. (ITI) acquires all of the voting stock of Global Outsourcing Corporation (GOC) on June 30, 2010. Amounts paid are as follows (in millions): The earnings contingency provides for a potential payout to the former shareholders of GOC at the end of the third year following acquisition. The balance sheets of both companies immediately prior to the acquisition are as follows. Fair values of GOC's assets and liabilities at the date of acquisition are also provided. The intangible assets reported above consist of patents and trademarks. GOC also has the following previously unreported intangible assets that meet SFAS 141(R) requirements for asset recognition:

Consolidated Balance Sheet Working Paper, Bargain Purchase
On December 31, 2012, Paxon Corporation acquired all of the outstanding common stock of Saxon Company for $1.8 billion cash. Paxon uses the complete equity method to report its investment. The trial balances of Paxon and Saxon at December 31, 2013, are shown below: Several of Saxon's assets and liabilities had fair values different from their book values at the acquisition date, as follows:

Speculative Foreign Contracts
Krispy Kreme Doughnuts, Inc.† has franchises operating outside the U.S. and invests in derivatives to hedge its foreign currency risk. Although it tries to hedge its various positions, on December 16, 2011, Krispy Kreme finds itself with the following unhedged forward contracts: Relevant exchange rates are:

General Fund Entries and Financial Statements
The Town of Amherst, NY† finances its operations from revenues collected from property taxes, waste management fees, municipal court fines, and interest on investments. Amherst maintains only a general fund. The following information is available for the year ended December 31, 2011:

Interest Rate Swap: Journal Entries
On January 1, 2011, Marshall Corp. issues $20,000,000 in 9 percent fixed rate debt with interest payments due every six months. Concurrently, Marshall enters into a plain vanilla interest rate swap in which it receives 9 percent fixed and pays variable at average LIBOR + 60 bp on a notional amount of $20,000,000. On June 30, 2011 the market interest rate on comparable fixed rate debt is 8 percent and LIBOR declined to 7.2 percent. LIBOR averaged 7.7 percent during the six-month period. The estimated fair value of the swap to Marshall is $250,000 on June 30, 2011, and the fair value of the debt is $20,250,000.