Get up to date on the latest FASB, SEC, and AICPA guidelines and best practices
Fair Value Measurement provides hands-on guidance and the latest best practices for measuring fair value in financial reporting. The Financial Accounting Standards Board (FASB), the U.S. Securities and Exchange Commission (SEC), and the American Institute of CPAs (AICPA) have all updated their guidelines for practitioners, and this book details the changes from a practical perspective. This new third edition includes a discussion on Private Company Council accounting alternatives for business combinations and impairment testing, with a detailed example of the Market Participant Acquisition Premium (MPAP), including European and Asian examples and expanded discussion of IFRS.
Fair value measurement guidelines continue to evolve, and this comprehensive reference provides a valuable, up-to-date resource for preparers, auditors, and valuation specialists.
* Adopt the best practices for implementing the FASB's Topic 820
* Learn the latest reporting requirements for fair value measurements
* Understand accounting alternatives for business combinations
* Examine the details of MPAP in Europe and Asia
Applying fair value measurements to financial statements requires a move away from rules-based standards and toward application of professional judgment. This controversial shift has led to a reliance on valuation specialists, who face their own challenges in applying Topic 820 amidst an economic downturn and recovery, leading to an ever evolving set of best practices. Practitioners must stay up to date, and be aware of the changes as they occur. Fair Value Measurement provides the most recent information and a practical approach to this area of financial reporting.
Autorentext
MARK L. ZYLA is a Managing Director of Zyla Valuation Advisors, LLC. an Atlanta, Georgia based valuation and litigation consultancy firm. He is a Certified Public Accountant, Accredited in Business Valuation (CPA/ABV), Certified in Financial Forensics (CFF) by the American Institute of Certified Public Accountants (AICPA), a Chartered Financial Analyst (CFA), and an Accredited Senior Appraiser with the American Society of Appraisers certified in Business Valuation (ASA).
Mark is the Chairman of the Standards Review Board of the International Valuation Standards Council (IVSC) and has served on the AICPA's Forensic and Valuation Services Executive Committee. Mark was inducted into the AICPA Business Valuation Hall of Fame in 2013.
Klappentext
The most recent developments and best practices for applying fair value measurement in financial reporting
The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have brought fair value measurements in financial reporting together through the issuance of parallel statements. This move away from traditional measurements under accounting standards requires a degree of professional judgment, often provided by an outside valuation specialist. Financial executives, valuation specialists, and auditors need to be aware of the latest requirements for applying fair value measurement to financial statements.
The Third Edition of Fair Value Measurement brings together best practice accounting and valuation guidance on relevant FASB Accounting Standards Codification (ASC) standards, such as ASC 820, Fair Value Measurements. This fully updated edition offers new and revised coverage of Private Company Council (PCC) accounting alternatives for business combinations and impairment testing, the latest on testing for impairment of goodwill for public entities, the application of the Market Participant Acquisition Premium (MPAP), fair value measurement of portfolio investments, and expanded discussion of fair value measurements under International Financial Reporting Standards (IFRS).
Inhalt
Preface xiii
Acknowledgments xix
Chapter 1: The History and Evolution of Fair Value Accounting 1
Why the Trend Toward Fair Value Accounting? 2
History and Evolution of Fair Value 5
Fair Value Accounting and the Economic Crisis 12
The FASB and IASB Convergence Project 17
The Future of Fair Value Measurement 23
Fair Value Quality Initiative for Valuation Specialists 24
Conclusion 26
Notes 26
Appendix 1A: The Mandatory Performance Framework 31
Performance Requirements 31
Conclusion 33
Notes 46
Chapter 2: Fair Value Measurement Standards and Concepts 47
FASB ASC 820, Fair Value Measurement 48
Disclosures 67
Fair Value Option 70
Standards in the Valuation Profession and Fair Value Measurements 77
Conclusion 79
Notes 80
Appendix 2A: Taxes and Fair Value Measurements 81
Summary of Changes under 2017 TCJA 81
Chapter 3: Business Combinations 85
Mergers and Acquisitions 86
Accounting Standards for Business CombinationsA Brief History 88
ASC 805, Business Combinations 90
Other Business Combination Highlights 95
Subsequent Accounting for Goodwill and Other Intangible Assets 99
Conclusion 100
Notes 101
Chapter 4: The Nature of Goodwill and Intangible Assets 103
History of Intangible Assets 104
Intellectual Property 105
Economic Basis of Intangible Assets 106
Identification of Intangible Assets 106
Useful Life of an Intangible Asset 111
Intangible Assets and Economic Risk 112
Goodwill 112
Economic Balance Sheet 114
Conclusion 116
Notes 117
Chapter 5: Impairment 119
Evolution of Impairment Testing 120
Applicable FASB Guidance for Impairment Testing 122
Accounting for the Impairment of Long-Lived Assets 123
Goodwill Impairment TestingPublic Companies 125
Goodwill ImpairmentOne-Step Impairment Loss 138
Testing Other Indefinite-Lived Intangible Assets for Impairment 139
Amortization of Goodwill 139
Conclusion 140
Notes 140
Appendix 5A: Example of a Qualitative Impairment AnalysisPlanTrust, Inc. 143
Financial Accounting Standards Board ASC 350, IntangiblesGoodwill and Other 143
PlanTrust, Inc. 144
Notes 159
Chapter 6: The Cost Approach 161
The Cost Approach under FASB ASC 820, Fair Value Measurement 162
Economic Foundation for the Cost Approach 164
Cost versus Price versus Fair Value 164
The Role of Expected Economic Benefits in the Cost Approach 166
Reproduction Cost versus Replacement Cost 167
Components of Cost 168
Obsolescence 169
The Relationships Among Cost, Obsolescence, and Value 170
Physical Deterioration 171
Functional (Technological) Obsolescence 172
Economic (External) Obsolescence 173
Applying the Cost Approach 174
Taxes Under the Cost Approach 178
Limitations of the Cost Approach 179
Conclusion 179
Notes 180
Chapter 7: The Market Approach 183
Applying the Market Approach When Measuring the Fair Value of an Entity or a Reporting Unit of an Entity 184
Conclusion 213
Notes 213
Chapter 8: The Income Approach 215
Introduction 215
Discounted Cash Flow Method 216
Multiperiod Excess Earnings Method 223
FASB Concepts Statement 7 239
Rates of Return Under the Income Approach 244
The Income Increment/Cost Decrement Method 245
Profit Split Meth...