Blackberry 2011 Annual Report Download - page 78

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Effective fiscal 2010, the Company expenses: (a) all direct costs associated with the acquisitions as incurred; (b) compensation paid
to employees for pre-combination services as part of the consideration paid; and (c) compensation paid to employees for post-
combination services as operating expenses separate from the business combination. The Company no longer expenses in-process
research and development; instead it is capitalized and amortized over its estimated useful life once it is ready for use. The Company
recognizes the excess of the fair value of net assets acquired over consideration paid in income.
During fiscal 2009, the Company purchased 100% of the common shares of Chalk Media Corp (“Chalk”). The transaction closed on
January 30, 2009. Chalk is the developer of Mobile chalkboard
TM
, which enables the rapid creation and secure, tracked deployment of
media-rich “Pushcasts”
TM
to BlackBerry smartphones.
During fiscal 2009, the Company purchased 100% of the common shares of a company whose proprietary software is being
incorporated into the Company’s software. The transaction closed on February 13, 2009.
The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition
along with prior year’s acquisition allocations:
February 26,
2011
February 27,
2010
February 28,
2009
For the year ended
Assets purchased
Current assets $11 $19 $1
Property, plant and equipment 5–1
Deferred income tax asset 126 3
Acquired technology 152 73 31
In-process research and development ––2
Patents –37 –
Goodwill
(1)
357 13 23
526 168 61
Liabilities assumed 11 15 13
Deferred income tax liability 17 1–
28 16 13
Net non-cash assets acquired 498 152 48
Cash acquired 192
Net assets acquired 499 161 50
Excess of net assets acquired over consideration paid
(2)
–(9) –
Purchase price $499 $152 $50
Consideration
Cash consideration $494 $152 $50
Contingent consideration
(3)
5––
$499 $152 $50
(1)
Represents the excess of the acquisition price over the fair value of net assets acquired, which is not expected to be
deductible for tax purposes when goodwill results from share purchases. Goodwill as a result of certain assets purchased is
expected to be deductible for tax purposes in the amount of approximately $20 million.
(2)
The Company recorded a gain of $9 million as a result of the excess of net assets acquired over consideration paid on one
of the acquisitions. The excess of the fair value of net assets acquired over consideration paid resulted from the combination
of the significant value attributed to the identifiable intangible assets and the Company’s ability to utilize tax losses of an
RESEARCH IN MOTION ANNUAL REPORT 2011 65
RESEARCH IN MOTION LIMITED
Notes to the Consolidated Financial Statements
continued
In millions of United States dollars, except share and per share data, and except as otherwise indicated