DESCRIPTION
Purchase price allocation based on fair value

DEFINITION
Allocate the purchase price to the fair value of the acquired assets, with goodwill being the only asset valued on a residual basis, as applicable

APPROACH
Value all identifiable intangible and tangible assets acquired

An acquirer may obtain control of an acquiree in a variety of ways such as:

• By transferring cash, cash equivalents or other assets (including net assets that constitute a business)
• By incurring liabilities
• By issuing equity interests
• By providing more than one type of consideration
• Without transferring consideration, including by contract alone

DESCRIPTION
Goodwill impairment

DEFINITION
Annual test required for companies with goodwill on their balance sheet to test for impairment

APPROACH
Step 1 - Perform a business enterprise value for operating units of company

Step 2 - If BEV is less than net carrying value of the assets, perform a valuation of the entire asset base to estimate the goodwill impairment

DESCRIPTION
Long-lived asset impairment

DEFINITION
As required by certain trigger events, test to determine if a book value write down to current fair value is required

APPROACH
If the sum of the undiscounted cash flows are less than the net carrying value of the assets, perform a valuation to estimate current fair value and measure impairment

Long-lived assets are non-current assets that are specified as:

• Property, Plant and Equipment that is depreciable for accounting purposes (basically, all buildings and equipment)
• Intangible assets that are amortizable for accounting purposes (goodwill is excluded as it is non-amortizable)

DESCRIPTION
Accounting for stock-based compensation

DEFINITION
Assess the fair value of options

APPROACH
Utilize options pricing models such as Black-Scholes