McKesson 2012 Annual Report Download - page 108

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McKESSON CORPORATION
FINANCIAL NOTES (Concluded)
104
24. Subsequent Event
In April 2012, we purchased the remaining 50% interest in our corporate headquarters building located in San
Francisco, California, for total cash of $90 million. The cash paid was funded from cash on hand. We previously
held a 50% ownership interest and are the primary tenant in this building. As a result, this transaction will be
accounted for as a step acquisition, which requires that we re-measure our previously held 50% interest to fair value
and record the difference between the fair value and carrying value as a gain in the consolidated statements of
operations.
The total fair value of the net assets acquired was $180 million, which was preliminarily allocated as follows:
buildings and improvements of $113 million and land of $58 million with the remainder allocated to settlement of
our pre-existing lease and lease intangible assets. The fair value of the buildings and improvements was determined
based on current market replacement costs less depreciation and unamortized tenant improvement costs, as well as,
other relevant market information, and has a weighted average useful life of 30 years. The fair value of the land was
determined using comparable sales of land within the surrounding market.
The re-measurement to fair value is anticipated to result in a pre-tax gain of approximately $75 million
($46 million after-tax). The pre-tax gain will be recorded within Corporate in the consolidated statements of
operations during the quarter ending June 30, 2012.