Financial Reporting Valuation

The Appraisal Foundation recently released a discussion draft for “The Valuation of Customer-Related Assets” This article examines attributes of customer-related intangible assets and their valuation.

As the use of fair value measurement has expanded, so has the need for professionals who have specialized capabilities related to the measurement of fair value and the resolution of fair value issues.

In March 2010, Diamond Foods, Inc. completed its acquisition of Kettle Foods. Nearly 40%, of the purchase price was allocated to “brand intangibles.” Such a high value leads to the question: How are such valuations determined and what are the drivers?

The AICPA released a draft accounting and valuation guide (via AICPA) for Assets Acquired to Be Used in Research and Development Activities in November of 2011.

On August 10, 2011, the FASB approved a pending exposure draft, “Testing Goodwill for Impairment,” which adds an optional qualitative assessment (referred to by some as the “Step Zero” test) to the annual goodwill impairment testing process.

In December 2010, the FASB issued ASU 2010-28, which updated rules pertaining to the appropriate measure of reporting unit carrying value.

The Public Company Accounting Oversight Board (PCAOB) recently released the “Report on Observations of PCAOB Inspectors Related to Audit Risk Areas Affected by the Economic Crisis,” which identified instances where auditors failed to comply with PCAOB standards.

The FASB issued an exposure draft regarding a broad range of proposed amendments to Topic 820 on June 29, 2010. The exposure draft is part of the ongoing convergence project and is intended to more closely align fair value measurements under U.S. GAAP and IFRS.

Excerpted from Mercer Capital’s book, Valuation for Impairment Testing, Second Edition

For privately held companies (particularly those sponsored by private equity and venture capital funds), getting the valuation process right the first time for equity compensation grant compliance is always the least expensive route in terms of both direct and indirect cost.

With many acquirers spending 2009 on the sidelines, the new accounting treatment for contingent consideration arrangements under SFAS 141R remains largely untested.

A purchase price allocation report should be well documented, concise, and provide sufficient background information. This article enumerates elements of a properly prepared purchase price allocation report.