a. Disney is already known for its multiple characters such as Mickey Mouse, Princesses and so on and how successful they are along the years. From a strategic perspective Disney will make this acquisition because they will get revenue not just from movies but also from videos games, advertising and licensing from the Marvel characters for years to come. The videos game sector will be big revenue for Disney knowing that Marvel has over 5000 characters (Captain America and Iron man just to name a few). Also it will be a good investment in order for Disney to stay on top the competitor Paramount.
b. Goodwill = Fair value – Book value
Fair value $4,000,000,000
Book Value $ (454,759,000)
c. The market price during the acquisition doesn’t affect the calculation of goodwill for this 100 percent acquisition, the fair value is more important and represent what Disney paid the get Marvel; the 29 percent represent the intangible asset.
If this were a less 100 percent acquisition the 29 percent premium does not matter; the fact that they offered 29 percent above the book value means that Disney is confident that Marvel is worth more under their control than buying some shares or investing in company. For a less than 100 percent acquisition, the non-controlling share of Marvel trade at price that is very different from the purchasing price that Disney offered. The $4 billion which represent the implied fair value is based on the goodwill and the company as a whole.
d. If Marvel is dissolved and merged, Disney will record goodwill and Marvel assets and liabilities will be recorded at fair value.
If Marvel continues to exist as a separate legal entity (acquisition) Disney will record Marvel as an investment. For the consolidation, the investment account will no longer…