The guidance for acquisition accounting is evolving. The FASB issued its “Business Combinations” statement in 2001, eliminating pooling-of-interests and the amortization of goodwill. This statement, SFAS No. 141, emphasized the need to identify and value intangible assets. In 2007, the FASB revised the accounting with SFAS No. 141R, now ASC 805. More changes are on the way, as U.S. and international accounting standards converge.
Orchard Partners is committed to providing its clients with appraisals that conform to the current accounting guidance. Our participation in the Appraisals Issues Task Force, attendance at national conferences and continuing work with auditors is evidence of that commitment.
Purchase Price Allocations for Acquisitions
The accounting standard for “Business Combinations” (ASC 805) requires the acquiring company to recognize the fair value of intangible assets acquired in an M&A transaction. An appraisal from Orchard provides a comprehensive review and valuation of intangible assets including intellectual property, in-process R&D, contracts, customer relationships and trade names.
Tests For Goodwill Impairment
ASC 350 dictates the accounting for “Goodwill and Other Intangible Assets.” Orchard can provide the annual test for goodwill impairment. If goodwill is impaired, Orchard’s report provides the auditor with a determination of the appropriate charge.