Harwell Valuation Advisors delivers valuation results supported by a detailed written report and work papers specifically addressing ASC 805 requirements. These deliverables can be easily adopted by auditors. Renee Harwell has worked as an auditor and speaks the same language. We are therefore able to answer the auditors’ questions quickly and efficiently.
ASC 805 applies to current accounting of business combinations. ASC 805 replaces FAS 141 which applied to business combinations prior to December 15, 2008. The premise of value used in ASC 805 measurements is fair value, which is defined in ASC 820 and focuses on market participants and exit values. Appropriate implementation requires appraisal, accounting and market knowledge.
Accounting for business combinations is complex. Harwell Valuation Advisors determines the fair value of all assets acquired, liabilities assumed, and adjust any previous non-controlling interests to fair value. The analysis includes the valuation of contingent assets and intangible assets.
Determining the fair value of any asset requires the appraiser to perform various advanced valuation methodologies while complying with FASB Statements. Proper compliance with ASC 805 and ASC 820 is critical to producing a valuation report that supports the audit process in a quick and efficient manner.
ASC 805 requires contingent consideration to be measured and added to total consideration. Harwell Valuation Advisors is experienced with determining contingent consideration fair value.
If the fair value of net assets acquired is less than the total consideration paid for the acquired entity, the difference is recorded as goodwill and tested annually for impairment according to ASC 350. If the fair value of net assets acquired exceeds the consideration paid, the entity recognizes a gain on bargain purchase. Both scenarios must be properly explained as to why they make sense in that specific transaction.
