CONSOR provides a comprehensive package of services designed to help intellectual property owners best position their assets in terms of tax implications, including asset valuation, royalty rate analysis, comparable transaction due diligence, transfer pricing strategy, purchase price allocation analysis, and charitable donation programs. We provide objective, independent financial reporting valuations that meet increasingly tough requirements and stand up under regulatory scrutiny.
Financial reporting valuation services include:
- Purchase Price Allocation (ASC 805) – Business combinations and the valuation of intangible assets (formerly SFAS 141R)
- Impairment Testing (ASC 350 and ASC 360) – Goodwill and other intangible asset impairment studies (formerly SFAS 142 and 144)
Under SFAS 141R, accounting for business combinations required that the purchase price be allocated to the acquired assets and liabilities at fair value as of the acquisition date. This is known as a Purchase Price Allocation. Often intangible assets such as patents, proprietary data, brands and other marketing-related intangibles comprise the key value drivers of the acquired company, and are therefore of most interest to the acquiring company in the acquisition process.
Under SFAS 142 and 144, Amortization over the asset’s useful life is required for intangibles with a definite life. Intangible assets with an indefinite life are not subject to amortization, but are tested annually for impairment. Such a review compares the fair value of the intangible to its carrying amount. The excess carrying value over fair value is an impairment loss that must be recognized.
FASB ASC 805 governs the accounting and reporting of acquisitions which occur in 2009 and beyond. This standard provides several substantive changes to the methodologies which must be employed when accounting for business combinations. For example, under ASC 805, business combination accounting applies to a wider range of transactions and events, including acquisitions of development stage companies and combinations of mutual entities.
Under ASC 350, and ASC 360, impairment tests are required and involve a two-step process to determine if an asset is impaired. Step one compares the fair value of a reporting unit to its carrying value. If the fair value exceeds the carrying value, there is no goodwill impairment and the test is complete. If not, impairment is indicated, requiring step two. Step two of the test, which is similar to the allocation of the purchase price in accordance with ASC 805, quantifies the amount of goodwill impairment.
Our experts ensure that the relevant accounting standard is implemented efficiently and pragmatically while maximizing value and complying with FASB, SEC and other regulations.