valuation

Examples of valuation in the following topics:

• Valuation of Intangible Assets

  • The valuation of intangible assets are primarily derived from transactions involving intangible assets.
  • Valuation models can be used to value intangible assets such as patents, copyrights, software, trade secrets, and customer relationships.
  • As a result, present value models or estimating of the cost to recreate an intangible asset are often used to is these valuations.
  • The valuation of intangible assets with identifiable useful lives such as patents, trademarks, and copyrights are initially valued at acquisition costs.
  • From an accounting perspective, intangible asset valuation is primarily derived from acquisition costs.

• Impacts of Costing Methods on Financial Statements

  • The method a company uses to determine it cost of inventory (inventory valuation) directly impacts the financial statements.
  • The method a company uses to determine it cost of inventory (inventory valuation) directly impacts the financial statements.
  • Without inflation, all three inventory valuation methods would produce the same results.
  • The inventory valuation method a company chooses directly effects its financial statements.
  • Differentiate between the FIFO, LIFO and Average Cost inventory valuation methods

• Basic Components of Asset Valuation

  • In finance, valuation is the process of estimating what something is worth.
  • Valuations are needed for many reasons such as investment analysis, capital budgeting, merger and acquisition transactions, financial reporting, taxable events to determine the proper tax liability, and in litigation.
  • Valuation of financial assets is done using one or more of these types of models:
  • This is used for assets whose carrying value is based on mark-to-market valuations; for fixed assets carried at historical cost (less accumulated depreciation), the fair value of the asset is not used.
  • This section discusses three possible asset valuation bases.

• Additional Factors to Consider

  • An important aspect of company valuation is determined when examining it in comparison to competitors.
  • An important aspect of company valuation is determined when examining it in comparison to competitors.
  • In addition, the valuator must analyze the values of comparable companies to determine their relationship to the company's value.
  • This is used for assets whose carrying value is based on mark-to-market valuations; for fixed assets carried at historical cost (less accumulated depreciation), the fair value of the asset is not used.
  • This is an example of an additional factor beyond book value that contributes to the overall valuation of a company.

• Adjusting for LIFO Reserve

• Comparability

  • Business valuation is a process and a set of procedures used to estimate the economic value of an owner's interest in a business.
  • Valuation is used by financial market participants to determine the price they are willing to pay or receive to perfect a sale of a business.
  • In addition to estimating the selling price of a business, the same valuation tools are often used by business appraisers to resolve disputes related to:
  • This low valuation affects the computation and evaluation of current assets and any financial ratios that include inventory, resulting in reduced comparability between companies using LIFO and others using FIFO.

• Bond Valuation Method

• Calculating Fair Value

  • Level One -- The preferred inputs to valuation are "quoted prices in active markets for identical assets or liabilities," with the caveat that the reporting entity must have access to that market.
  • Level Two -- This valuation is based on market observables.
  • Within this level, fair value is also estimated using a valuation technique.
  • Significant assumptions or inputs used in the valuation technique are based upon inputs that are not observable in the market and are based on internal information.
  • This is used for assets whose carrying value is based on mark-to-market valuations; for assets carried at historical cost, the fair value of the asset is not used.

• Valuing Accounts Receivable

  • Differentiate between the direct write-off method and the allowance method of accounts receivable valuation

• Financial Statement Notes

  • The notes support valuations for how particular accounts have been computed.
  • Any items within the financial statements that are valuated by estimation are part of the notes if a substantial difference exists between the amount of the estimate previously reported and the actual result.