Valuation for Financial Reporting : Fair Value Measurements and ...

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Sample Intangible Asset Valuation Report Language and Example 1 143The accompanying appraisal report presents the data, assumptions, and methodologiesemployed in developing our recommended values. Our report and analysis are in conformancewith the Uniform Standards of Professional Appraisal Practice (USPAP) issued byThe Appraisal Foundation. The Appraisal Foundation was authorized by Congress as thesource of appraisal standards and appraiser qualifications. The standards deal with theprocedures and reporting requirements to be followed in the preparation of an appraisal,analysis, or opinion. Standards 9 and 10 address the guidelines for developing and communicatingbusiness appraisals.We have estimated the fair values of the intangible assets of the Company for purposes ofassisting Acquirer in the allocation of the total purchase price solely for financial statementreporting. The premise of value is Going Concern. The intangible assets for whichestimates of fair value were developed are summarized below. See Exhibit 4.16 for thecomplete allocation of purchase price.IdentifiableIntangible AssetsFair ValueRemainingUseful Life(In Years)Acquired Computer Software $7,120,000 4Technology 16,560,000 5In-process Research and Development 4,530,000 N/ATrade Name 12,660,000 N/ACustomer Base 7,090,000 7Noncompete Agreement 2,720,000 3Total Identified Intangible Assets $50,680,000Our analysis and conclusions, which are to be used only in their entirety, are for the use ofAcquirer and its attorneys and accountants solely for financial reporting purposes. Theyare not to be used for any other purpose, or by any other party for any purpose, withoutour express written consent.The approaches and methodologies used in our work did not comprise an examination inaccordance with generally accepted accounting principles, the objective of which is anexpression of an opinion regarding the fair presentation of financial statements or otherfinancial information, whether historical or prospective, presented in accordance with generallyaccepted accounting principles.We express no opinion and accept no responsibility for the accuracy and completeness ofthe financial information or other data provided to us by others. We assume that thefinancial and other information provided to us is accurate and complete, and we haverelied upon this information in performing our valuation.If you have any questions concerning this valuation, please contact Barry Good Appraiserat (XXX) XXX–XXXX.Very truly yours,FVA&M, LLCBy: Barry Good Appraiser, ASA, CBA, CPA/ABV, CVA(continued )
144 Valuation for Financial ReportingTABLE OF CONTENTSPurpose of EngagementScope of ServicesCertification of the AppraiserExecutive Summary—Identifiable Intangible Assets Recognized Apart From GoodwillIntroduction—Transaction OverviewCompany OverviewsEconomic OverviewIndustry OverviewValuation MethodologyDetermination of Discount RateValuation of Identified Intangible AssetsAcquired Computer SoftwareAssembled WorkforceTrade NameNoncompete AgreementTechnology (Construction Accounting Software)In-process Research and DevelopmentCustomer BaseAllocation of Purchase Price and the Value of Residual GoodwillReconciliation of Weighted Average Cost of Capitalto the Weighted Average Rate of ReturnExhibitsAppendicesPURPOSE OF ENGAGEMENTAccording to the Financial Accounting Standards Board (FASB) Statement of FinancialAccounting Standards (SFAS) No. 141, Business Combinations, all business combinationscompleted on or after June 30, 2001, are to be accounted for exclusively by the purchasemethod. Under purchase accounting, all assets acquired, including goodwill and otherintangible assets, should be stated on the financial statements at fair value (see ‘‘Standardof Value’’ discussion below).FASB Statement No. 141 requires that intangible assets be recognized as assets apart fromgoodwill if they meet one of two criteria: (1) the contractual-legal criterion or (2) theseparability criterion. The Statement also requires the allocation of the purchase price paidto the assets acquired and the liabilities assumed by major balance-sheet caption.An intangible asset shall be recognized as an asset apart from goodwill if it arises fromcontractual or other legal rights (regardless of whether those rights are transferable orseparable from the acquired entity or from other rights and obligations). If an intangibleasset does not arise from contractual or other legal rights, it shall be recognized as an assetapart from goodwill only if it is separable; that is, it is capable of being separated ordivided from the acquired entity and sold, transferred, licensed, rented, or exchanged(regardless of whether there is an intent to do so). An intangible asset that cannot be sold,transferred, licensed, rented, or exchanged individually is considered separable if it can besold, transferred, licensed, rented, or exchanged in combination with a related contract,asset, or liability.(continued )
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VALUATION FORFINANCIALREPORTINGFair
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VALUATION FORFINANCIALREPORTINGFair
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To our familiesnear and faryoung an
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PrefaceThe second edition of this b
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AcknowledgmentsTo Deanna Muraki, th
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xivAbout the Authorsappraiser with
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Valuation for FinancialReportingFai
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Appendix 1.2Pronouncements Excluded
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Intellectual PropertyAppendix 2.1On
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Appendix 2.2Significant Changes in
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# Copyright 2007 by FVG Holdings, L
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Exhibit 3.4 Target Company Business
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Exhibit 3.7 Target Company Valuatio
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Exhibit 3.7 (Continued)No. Job Titl
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Exhibit 3.8 Target Company Valuatio
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210 IndexBusiness Enterprise Analys
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212 IndexGoodwill (continued )111,
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214 IndexLong-termcapital, 71debt,
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216 IndexSecurities and Exchange Co
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