| RULING |
DESCRIPTION |
DEFINITION |
APPROACH |
| FAS 141 |
Purchase price allocation based on fair value |
Allocate the purchase price to the acquired assets, with the remainder going to goodwill |
Value all identifiable intangible and tangible assets acquired
> Requirements and Approach (PDF) |
| FAS 142 |
Goodwill impairment |
Annual test required for companies with goodwill on their balance sheet to test Impairment |
Step 1 - Perform a business enterprise value for operating units of company
Step 2 - If BEV is less than net carrying value of goodwill, perform a valuation of the entire asset base to estimate the goodwill impairment |
| FAS 121/144 |
Long-lived asset impairment |
As needed, test to write down the net carrying value of the assets to fair value |
If undiscounted cash flows are less than the net carrying value of the assets, perform a valuation to estimate fair value |
| FAS 123 |
Accounting for stock-based compensation |
Assess the fair value of options |
Utilize options pricing models such as Black-Scholes |
| IRC 338 (h) 10 |
Purchase price allocation for tax purposes. Stock transaction treated as an asset acquisition |
Allocate the purchase price to the acquired assets, with the remainder going to goodwill
Determine intercompany transfer pricing commensurate with income attributable to the intangible |
Value all identifiable intangible and tangible assets acquired
Economic analysis to establish the approptiate transfer price on royal rate |
| IRC 482 |
Transfer pricing - royalty rate for intangible assets |
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| IRC 861/864 |
Foreign interest expense calculation based on the market value of the tangible assets |
Allocate foreign interest expense on the fair market value of the tangible assets as opposed to the historical tax basis |
Value all tangible assets using fair market value and by tax entities |
