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  "documentTitle": "Stryker Corp. (SYK)",
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      "text": "Stryker’s Critical Audit Matter for 2020 involved the Wright Medical acquisition. There is no mention of inventory valuation, which changed five times, but rather issues related to profit margins for the acquired assets. Notably, valuation of inventory affects Cost of Sales, which is a critical factor driving profit margins.",
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      "text": "How We Addressed the Matter in Our Audit: We tested the effectiveness of controls over the accounting for the business combination, including testing controls over the estimation process supporting the recognition and measurement of consideration transferred and developed technology. We also tested management's review of assumptions used in the valuation models. To test the valuation of acquired assets, we performed audit procedures that included, among others, evaluating management's identification of assets acquired and liabilities assumed and assessing the fair value measurements prepared by management and their third-party valuation specialists, including the discount rates, revenue growth rates and projected profit margins as used in valuing the developed technology. We involved our valuation specialists to assist with the evaluation of methodologies used by the Company and significant assumptions included in the fair value estimates. For example, to evaluate the revenue growth rates and projected profit margins, we compared the amounts to historical results of the Company's business, as well as the acquired business' historical results, and current industry and market trends for those in which the Company operates and performed sensitivity analyses on key assumptions. We also evaluated the adequacy of our disclosures included in Note 6 related to these acquisitions.",
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      "text": "The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.",
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      "text": "Source: 2020 10-K",
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      "text": "Business Combinations: As described in Note 6 to the consolidated financial statements, in 2020 the Company completed the acquisition of all the outstanding equity of Wright Medical Group N.V. (Wright) for total consideration, net of cash acquired of $4,081 million. The acquisition was accounted for as a business combination. The recognition, measurement and disclosure of the Company's business combination in the 2020 consolidated financial statements and related footnote is preliminary and was considered especially challenging and required significant auditor judgment due to the complex determination by management of the appropriate assumptions, such as discount rates, revenue growth rates, and profit margins for the valuation of acquired assets, including developed technologies. The Company used a discounted cash flow model to measure the developed technologies.",
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      "text": "Wright Medical Group Cited Under Critical Audit Matter, But Inventory Not Mentioned",
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      "text": "Stryker’s Critical Audit Matter of Wright Medical “Especially Challenging”",
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