SFAS Nos. 141 and 142: Up close and personal

In an effort to improve the accuracy and relevance of companies’ financial information for analysts, the Financial Accounting Standards Board (FASB) recently issued two new standards, SFAS Nos. 141 and 142, which require business valuation and intangible asset expertise. This article explains what each standard was intended to address and clarifies possible confusion about how and when to apply them.

Private vs. public companies

Valuators sometimes rely on public stock market data to obtain objective pricing information when valuing private businesses. But comparisons between public and private companies often have limitations and may require subjective adjustments to bridge the gap. This article discusses the possible discrepancies and how valuators adjust for them.

Tax Court resolves valuators’ irreconcilable differences

It’s not unusual for different valuators to disagree somewhat on the value of an estate or business. But a “startling” difference between two “deficient and unpersuasive” valuation opinions recently forced the Tax Court to perform independent calculations to reach a compromise. This article details the two experts’ respective opinions and how the Tax Court reacted to both.

Dot-com accounting tricks

High-technology companies such as dot-coms are among the most difficult businesses to value. Few have established track records, and even fewer can boast a profit. Because of this difficulty, they are more susceptible than most companies to accounting tricks. This article lists four common accounting strategies that may skew a valuator’s conclusion, including inflated revenues and reporting investment gains as operating income.

Putting visual aids to work for you

This brief article points out the benefits and drawbacks of using visual aids in court and explains under what circumstances they can be most helpful. It also notes the types of visual aids that are typically most useful in conveying financial data to a judge and jury.