Valuation for Financial Reporting

MICHAEL J. MARD, CPA/ABV, ASA, is author or coauthor of seven books, including Financial Valuation Workbook, Second Edition and Driving Your Companys Value, both published by Wiley, as well as books on SFASs 141, 142, and 157. He is President of The Financial Valuation Group of Florida, Inc., and has testified in court approximately 100 times. JAMES R. HITCHNER, CPA/ABV, ASA, is author of Financial Valuation, Second Edition and coauthor of Financial Valuation Workbook, Second Edition, published by Wiley. He is Editor in Chief of Financial Valuation and Litigation Expert journal. STEVEN D. HYDEN, CPA/ABV, ASA, is the coauthor of four books, including books on SFASs 141, 142, and 157. He is Chief Operating Officer of The Financial Valuation Group of Florida, Inc., and has developed analyses that have been reviewed and accepted by the Securities and Exchange Commission, major accounting firms, the IRS, and the courts.

Preface ix Acknowledgments xi About the Authors xiii About the Website xvii Chapter 1 Fair Value Measurements and Financial Reporting: Financial Reporting and the Current Environment 1 Fair Value Measurements 6 Mark-to-Market Accounting 18 Notes 20 Appendix 1.1: Fair Value Flowchart 22 Chapter 2 Business Combinations 29 Intangible Assets 29 Business Combinations 35 The Acquisition Method 36 Recognition and Measurement 41 Goodwill 53 Recording the Consideration Transferred 55 Disclosure 56 Notes 57 Appendix 2.1: Business Combination Flowchart 60 Appendix 2.2: Business Combination Overview 65 Appendix 2.3: Intellectual Property 66 Chapter 3 Case Study 1: Determining the Value of Goodwill and Other Intangible Assets in a Business Combination 71 Consideration and Calculation of the Total of Intangible Assets and Goodwill 72 Business Enterprise Analysis 81 Valuation of Tangible Assets 88 Valuation of Intangible Assets 91 Valuation of Goodwill 122 Weighted Average Return on Assets 123 Disclosure 124 Notes 128 Chapter 4 Noncontrolling Interests and Impairment 131 Noncontrolling Interests 131 Impairment 135 Notes 141 Chapter 5 Case Study 2: Impairment Analysis 143 Valuation of Tangible Assets 155 Valuation of Intangible Assets 158 Conclusion 185 Notes 185 Chapter 6 Implementation and Reference Aids 187 Business Valuation Reporting Standards 187 Reference Aids 197 Implementation Aids 235 Notes 267 Index 269