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Compaq Computer Acquisition of DEC

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									                  Compaq Computer Acquisition of DEC
                                   Creative M&A Accounting



           Fair Value Balance Sheet of Digital

  Assets                          Liabilities                     Stock issued
                                  Equity                          Options issued
                                                                  Cash paid
                                                                         Total


Assets acquired:                                                  Cash acquired
        Short-term                                                Compaq cash
        Long-term                               Price paid =
                                                                        Total
        Total
Less negative goodwill
Adjusted assets acquired
Liabilities assumed
                                                                      Bypassed the income statement
        “Purchase” price
IPR&D written-off
Adjusted net assets               5,781                 Dr     Acquisition value (equity)
                                                        Dr     Restructuring expense
                                                        Cr     Accrued restructuring

PP&E
IPR&D
Proven R&D                                        Employee separation
Customers                                         Office closures
Trademarks                                        Relocation of employees
Other assets                                      Terminations
Deferred taxes                                           Sub-total
       Total             10,372 (4,106)           Spent
                                                         Total                    1,734




Why would Compaq use such creativity? What other issues are evident in the 10-Q for 1998?




  Financial Statement Analysis

								
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