1. Yahoo acquires Tumblr for $990.2 million in May 2013

2. Assets acquired from Tumblr ($ in millions) Cash $ 16.6 Other tangible assets 74.0 Identifiable intangible assets: Developed technology 23.7 Customer contracts 182.4 Trade name 56.5 Total fair value of assets acquired $ 353.2 Liabilities assumed $ (113.8) Net value of identifiable assets acquired $ 239.4

3. Question #1 What is the amount of goodwill that Yahoo will recognize from this transaction?

4. Net asset value vs. Purchase price Cash $ 16.6 Other tangible assets 74.0 Identifiable intangible assets: Developed technology 23.7 Customer contracts 182.4 Trade name 56.5 Total fair value of assets acquired $ 353.2 Liabilities assumed $ (113.8) Net value of identifiable assets acquired $ 239.4 Purchase price $ 990.2 Difference $ 750.8

5. Net asset value vs. Purchase price Cash $ 16.6 Other tangible assets 74.0 Identifiable intangible assets: Developed technology 23.7 Customer contracts 182.4 Trade name 56.5 Total fair value of assets acquired $ 353.2 Liabilities assumed $ (113.8) Net value of identifiable assets acquired $ 239.4 Purchase price $ 990.2 Goodwill $ 750.8

6. Question #2 Which intangible assets in the purchase of Tumblr can be amortized by Yahoo?

7. Question #2 Which intangible assets in the purchase of Tumblr can be amortized? Identifiable intangible assets: Developed technology $ 23.7 Customer contracts 182.4 Trade name 56.5

8. Question #3 Why would Yahoo be willing to pay $750 million more than the value of Tumblr’s identifiable assets?

9. Question #3 Why would Yahoo be willing to pay $750 million more than the value of Tumblr’s identifiable assets? Answer: Yahoo expects Tumblr to bring in ad revenue. In addition, Yahoo wants to gain access to Tumblr’s young community of users.