Question 1 What is the smallest intangible asset recorded from the oculus deal? and the largest intangible asset recorded from the WhatsApp deal? How will these intangible assets be accounted for...

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Whatsapp Acquisition by Facebook
Contents
Question 1:    3
Question 2:    3
Question 3:    4
Question 4:    5
Question 5:    5
References:    7
Question 1:
The smallest intangible asset recorded in the oculus deal of Facebook is the research and development intangible asset which represented the value that has been assigned to the projects of research and development which were acquired by facebook. On the acquisition date technological feasibility was not established and any other future use was not visible. So capitalization of these assets was done and their accounting would be done as if these are intangible assets with indefinite value and they till these projects are completed or till the time they get abandoned by any reason they would be subject to impairment (Solomon, 2022). Once the project get completed successfully and product gets launched, the useful life in relation to the R&D intangible assets would be determined separately and the amortization in relation to these assets would be recorded as an expense which is distributed according to the useful life that has been estimated for these specific projects.
The largest intangible asset recorded in the Whatsapp deal of facebook is goodwill. The goodwill so generated and recorded is required to be tested at least on annual basis for the purpose of impairment and such impairment should be done even in shorter period of time in case there are any indicators present for which impairment is required. In case the goodwill gets impaired and subsequent write down in the value of goodwill should take place because it shows that the goodwill is not providing enough synergies for the growth in future. It means that the expected targets from the Whatsapp are not achieved and the strategic advantages are declining. The losses which occur due to impairment of the goodwill are not subject to tax deduction.
Question 2:
When acquisition of Whatsapp was done by facebook in February, 2014; the purchase consideration of $19 billion gave a shock to the investors of the company as well as the experts. During that period, it was not a big company but only a small company which consist only 55 employees and in addition to this, profits were also inadequate at that time. Advertisements are not used by Whatsapp as a revenue source, a fee of $1 for subscription is charged by Whatsapp but that fee is from the second year which means that it provides a year subscription free to the users. When the acquisition was made by Facebook the value it paid that is $19 billion is gar more than the actual fair value.
If we look at the financial factors than the price of $19 billion is not at all justified but apart from the financial factors there are some non financial aspects also which were taken into consideration by Facebook in order to derive the purchase consideration. The users of Whatsapp were...