Question: Green Mountain Coffee Roasters reported net income
Green Mountain Coffee Roasters reported net income for the year ended September 26, 2009 of $54.439 million. There were 120,370,659 common shares outstanding. On November 13, 2009, Green Mountain acquired all the outstanding shares of Timothy’s Coffee of the World for $155.74 million cash. The purchase price was allocated as follows ($ in thousands):
The identifiable intangible assets included $83.2 million for customer relationships with an estimated life of 16 years, $8.9 million for Timothy’s trade name with an estimated life of 11 years, and $6.2 million for supply agreements with an estimated life of 11 years. The valuation of fixed assets to fair value was not significant.
Required:
A. Prepare the consolidation worksheet entry(ies) to eliminate the investment account.
B. If Timothy’s Coffee generated $15 million of income (not considering the acquisition) in 2010,
will the acquisition of Timothy’s Coffee be accretive or dilutive to the earnings per share of Green Mountain?
Transcribed Image Text:
Purchase price $155,740 Allocated to: Accounts receivable Inventory 8,732 6,911 Other current aet 83 Fixed assets 7,827 Identifiabke intangibles Accounts payablk Accrued ex penes Deferred taxes 98,300 (6,852) (1,284) (27,274) Total 86,443 Excess 69,297
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