As mentioned in the chapter, Research in Motion Inc. (RIM) is the Canadian company that developed the famous BlackBerry communications device. To answer the questions that follow, refer to Note 12 from RIM's 2010 financial statements, which appears in Exhibit 9-6 on pages 604-605.
Required:
a. Part (a) of the note describes a demand credit facility. What does RIM use the credit facility for? As at the end of its 2010 fiscal year, what portion of this line of credit had the company used?
b. The demand credit facility is described as unsecured. What does this mean? Would the company be able to get a lower interest rate if its line of credit was secured? Explain.
c. Part (c) of the note describes RIM's involvement in various legal events. For the settlement of the litigation with Vista, RIM expensed $163.8 million. Had this amount been accrued as a liability in the company's previous financial statements? Explain your answer.
d. As a result of the Vista settlement, what amount did RIM record as an intangible asset? Does it seem reasonable that RIM would record some of the costs of a patent lawsuit as an intangible asset? (If you need to review intangible assets, refer back to Chapter 8).