The Professional's Guide to Fair Value. ; Preparing and Reading Financial Statements

Content: Preface xi    Acknowledgments xv     Chapter 1: Significance of Value 1     Business Uses for Valuation 2     Mergers and Acquisitions 2     Financial Reporting 3     Investment Bankers versus Valuators 8     Valuation Requirements 8     Litigation Risks 9     Ten Commandments of Valuation 10     Chapter 2: Fair Value Concept 13     Relevant Pronouncements 14     Definitions 14     Market Participants 15     Fair Value Accounting 16     Revaluation under IFRS 16     Other Types of Value 17     Valuation Principles 19     Reporting and Cash-Generating Units 20     Chapter 3: Fair Value Framework 21     Stage 1: Determine the Unit of Account 22     Stage 2: Evaluate the Premise of Value 24     Stage 3: Assess the Principal Market 29     Stage 4: Establish the Most Advantageous Market 30     Stage 5: Select Appropriate Valuation Methods 33     Stage 6: Estimate Fair Value Conclusions 37     Chapter 4: Taming the Future 41     Definitions 42     Effect of Market Participants    Assumptions 43     Scenario Analysis 45     Scenario Implications 49     Chapter 5: Projecting What Is to Come 53     Base the Future on the Past 54     The Truth Is in the Parts 56     Avoid Unnecessary Risks 59     Garbage In, Garbage Out 63     Believable and Likely Conclusions 66     Quality of Earnings 67     Conclusion 68     Chapter 6: The Market Approach to Fair Value 69     Nature of Markets 70     Classifying Assets 72     Comparable Transactions 74     Guideline Entities 76     Guideline Entities Example 79     Licensed Asset Example 82     Conclusion 84     Chapter 7: The Cost Approach to Fair Value 85     Current Replacement Cost 85     Deductions 87     Integrating the Factors 90     Residual Value 92     Useful Lives 92     Valuing Intangible Assets by the Cost Approach 97     Conclusion 103     Chapter 8: The Income Approach to Fair Value 105     Capitalization Methods 106     Income Approach   Discounting 110     Terminal Amounts 115     Application to Intangible Assets 116     Chapter 9: Sources of Value   Profits 121     Structure of Businesses 121     Innovation 122     DuPont Analyses 129     Chapter 10: Sources of Value   Risks 135     Reducing Risks 136     Continual Monitoring and Testing 136     Dealing with Biases 138     Risk Rate Component Model 139     Intellectual Capital Value Drivers 146     Conclusion 147     Chapter 11: Valuing Liabilities 149     Liabilities Transferred Rather Than Settled 150     Asset Retirement Obligations 157     Contingent Liabilities 158     Chapter 12: Business Combinations 161     Do Mergers Pay Off? 162     Why Merge? 163     Determination of Synergies 166     Intrinsic and Investment Values 167     Quantification 167     Chapter 13: Purchase Price Allocation 173     Stage 1: Determine the Acquirer 174     Stage 2: Establish the Consideration   s Fair Value 176     Knowledge of the Industry 178     Stage 3: Identify All the Items Involved 180     Stage 4: Select Appropriate Valuation Techniques 188     Stage 5: Estimate Fair Values and Reconcile Rates of Return 190     Conclusion 192     Chapter 14: Impairment 193     Reporting Units 194     Cash-Generating Units 196     Goodwill 197     Allocations 198     GAAP Long-Lived Assets Impairment Test 198     IFRS Impairment Test 200     GAAP Goodwill Impairment Test 202     Chapter 15: The Auditor   s Blessing 207     Auditing Fair Values 208     Conclusion 220     About the Author 221     Index 223