The Financial Reporting Blog

A weekly update on financial reporting topics curated by Mercer Capital’s Financial Reporting Valuation professionals.


New Rules for Goodwill Impairment?

The Brexit vote last week delivered an unexpected (depending on who you ask) macro surprise to financial markets across the globe. While the impact of broad-based volatility on individual companies will obviously vary, negative shocks to stock prices can trigger the need for impairment tests. The following outlines some recent changes to the impairment testing regime – this post first appeared in October 2015 on the Financial Reporting Blog, which provides corporate finance managers with periodic updates and commentary around several topics including impairment testing.

5 Things to Know about Revenue Recognition

Under current US GAAP and IFRS guidelines, the recognition of revenue is based on the probability of collection and the delivery status of promised goods and services. The newer standards allow revenue to be recognized over a period of time and is analogous to the percentage of completion approach more typically used for long-term contracts. This post addresses key components of coming changes.

Dell “Loses” the Appraisal Battle but “Wins” Overall

Dell Inc. engaged in a management buyout (“MBO”) in October 2013 that effectively took the Company private, leaving Michael Dell in control (75% of its stock) with a financial sponsor (25% of its stock). The majority of shareholders tendered their shares, and received the offered consideration. Certain shareholders dissented, setting in motion an appraisal proceeding in Delaware to determine the (statutory) fair value of their shares of Dell Inc. as of the day prior to the merger. This week, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery filed an opinion in In Re: Appraisal of Dell Inc. determining the fair value of the dissenters’ shares. This guest post by Chris Mercer looks to see who the “winners” and the “losers” were in the appraisal action, and in the transaction itself.

Non-GAAP Measures: The SEC Updates Interpretation of Disclosure Regulations

Non-GAAP measures can provide useful context around required disclosures for analysts and other users of financial statements, especially regarding management’s perspective on business. Updated guidance from the SEC in mid-May 2016 clarifies its interpretation of rules and regulations on the use of non-GAAP financial measures.

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