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ASC 805 Valuation Update: Application Software

Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC) have consistently emphasized the importance of accurate business combination accounting.  The introduction of the substantially updated guidance coincided with the recession, resulting in 2010 to be the first full year for the healthy, post-FAS 141R M&A activity.  We studied the accounting purchase price allocation results with the focus on goodwill and identifiable intangible asset for Application Software companies.  Please download our summary by clicking on the image below.

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More Updates

Intellectual Property, Goodwill, and Other Intangible Assets

The predominant amount of S&P 500 value comes from intangible assets and goodwill (“Intangibles”) of the underlying companies. It is no surprise that patents and brands are more valuable than desks. Understanding the components of intangible value is of great relevance to tax authorities and financial stakeholders.

Many Ways to Define Business Value

“Our business is worth $10 million,” they said.  So the buyer only needed $6 million cash to buy it. There are many ways to talk about what a business is worth.  In the above example, $10 million can be Business Enterprise Value, while $6 million is the value of equity.  The buyer assumed a $4 million bank loan. Here are

Balance Sheet Matters in Business Valuation

Can you find a business valuation estimate on a financial statement? The balance sheet contains the book value of equity, which is the first approximation of what the company is worth.  The number would actually be pretty good if it weren’t for unaccounted-for intangible assets and goodwill.  For recently acquired companies, the book value of equity is exactly fair market

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