Sprint - Nextel 2015 Annual Report Download - page 104

Table of Contents
Index to Consolidated Financial Statements
SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In September 2015, the FASB issued authoritative guidance amending BusinessCombinations,which requires that an acquirer recognize adjustments to
provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, including the
cumulative effect of the change in provisional amount as if the accounting had been completed at the acquisition date. The adjustments related to previous
reporting periods since the acquisition date must be disclosed by income statement line item either on the face of the income statement or in the notes. The
amendments are to be applied prospectively to adjustments that occur after the effective date. The amendments will be effective for the Company for the fiscal year
beginning April 1, 2016, including interim periods within that fiscal year, although early adoption is permitted for financial statements that have not been issued,
and will be applied, as necessary, to future business combinations.
In January 2016, the FASB issued authoritative guidance regarding FinancialInstruments, which amended guidance on the classification and
measurement of financial instruments. Under the new guidance, entities will be required to measure equity investments that are not consolidated or accounted for
under the equity method at fair value with any changes in fair value recorded in net income, unless the entity has elected the new practicability exception. For
financial liabilities measured using the fair value option, entities will be required to separately present in other comprehensive income the portion of the changes in
fair value attributable to instrument-specific credit risk. Additionally, the guidance amends certain disclosure requirements associated with the fair value of
financial instruments. The standard will be effective for the Company’s fiscal year beginning April 1, 2018, including interim reporting periods within that fiscal
year. The Company is currently evaluating the guidance and assessing the impact it will have on our consolidated financial statements.
In February 2016, the FASB issued authoritative guidance regarding Leases.The new standard will supersede much of the existing authoritative
literature for leases. This guidance requires lessees, among other things, to recognize right-of-use assets and liabilities on their balance sheet for all leases with
lease terms longer than twelve months. The standard will be effective for the Company for its fiscal year beginning April 1, 2019, including interim periods within
that fiscal year with early application permitted. Entities are required to use modified retrospective application for leases that exist or are entered into after the
beginning of the earliest comparative period in the financial statements with the option to elect certain transition reliefs. The Company is currently evaluating the
guidance and we expect it to have a material impact on our consolidated financial statements, however we are still assessing the overall impact.
Note 3. Significant Transactions
Acquisition of Remaining Interest in Clearwire
On July 9, 2013, Sprint Communications completed the Clearwire Acquisition. The cash consideration paid totaled approximately $3.5 billion , net of
cash acquired of $198 million . Approximately $125 million of the cash consideration is accrued for within "Accrued expenses and other current liabilities" on the
consolidated balance sheet for dissenting shares relating to stockholders who exercised their appraisal rights.
The fair value of consideration, which is measured at the estimated fair value of each element of consideration transferred as of the Clearwire
Acquisition Date, was determined as the sum of (a) approximately $3.7 billion of cash transferred to Clearwire stockholders, which included $125 million of cash
relating to dissenting shares, (b) approximately $3.3 billion representing the estimated fair value of Clearwire shares held by Sprint Communications immediately
preceding the acquisition and (c) approximately $59 million of share-based payment awards (replacement awards) exchanged for awards held by Clearwire
employees.
Purchase Price Allocation
The consideration transferred was allocated to assets acquired and liabilities assumed based on their estimated fair values at the Clearwire Acquisition
Date. The allocation of consideration transferred was based on management's judgment after evaluating several factors, including a valuation assessment.
Management finalized its purchase price allocation during the quarter ended June 30, 2014. Adjustments made since the initial purchase price allocation decreased
recorded goodwill by approximately $269 million and were primarily attributable to a reduction of approximately $270 million made to deferred tax liabilities as a
result of additional analysis. The remaining adjustments were insignificant.
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