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Intangible Assets: Eli Lilly and Company

Required: Refer to Eli Lilly's 2012 annual report to answer the following questions. The 2012 annual report of Eli Lilly & Company can be found here: http://www.sec.gov/Archives/edgar/data/59478/000005947813000007/lly-20121231x10k.htm

1. What time frame does Eli Lilly use to amortize its finite-lived intangible assets?
2. When does Eli Lilly test its intangibles for impairment?
3. What is the balance sheet value of goodwill and other intangibles at 12/31/2012? What types of intangible assets are included in this line item? How is amortization expense distributed in the Income Statement?
4. How much goodwill was recorded when Eli Lilly purchased Alnara during 2010?
5. Has Eli Lilly recognized an impairment loss on its goodwill in the past three years? Where can you find this information?
6. What was the company's R&D expense for 2012?

Solution Preview

1. What time frame does Eli Lilly use to amortize its finite-lived intangible assets?

As it states on page 50: "Goodwill and other intangibles results from excess consideration in a business combination over the fair value of identifiable net assets acquired. Goodwill is not amortized. Intangible assets with finite lives are capitalized and are amortized over their estimated useful lives, ranging from 3 to 20 years."
So, 3 to 20 years, with a weighted average life of 9 years (footnote 7).

2. When does Eli Lilly test its intangibles for impairment?

As it states on page 51: "Goodwill and indefinite-lived intangible assets are reviewed for impairment at least annually and when certain impairment indicators are present. When required, a comparison of fair value to the carrying amount of assets is performed to determine the amount of any impairment. When determining the ...

Solution Summary

Your discussion is 533 words and gives you the page numbers, quote from the footnotes and discussion to assist in finding the needed details.

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