Financial Reporting: SFAS 141 & 142

In the past few years, the Financial Accounting Standards Board (FASB), in SFAS 141 on Business Combinations and SFAS 142 on Intangible Assets, has adopted new procedures and definitions. For financial reporting purposes, goodwill is no longer considered an intangible asset. It must be classified and tested under the guidelines of SFAS 142. Intangible assets specifically identified in SFAS 141 must be valued and recorded on the financial statements and can no longer be included as goodwill. Also, SFAS 141 requires purchasers to provide an independent fair value allocation of the purchase price to all tangible and intangible assets acquired. Assets, both tangible and intangible, must be reviewed on an annual basis or whenever a defined triggering event occurs to determine whether they as well as goodwill have been impaired.

These changes make the identification and valuation of tangible and intangible assets all the more important, both during pre-acquisition due diligence and post-acquisition compliance with financial reporting standards. Meyers, Harrison & Pia, LLC's professionals stay current with all financial reporting issues and requirements. We are experienced in the methodology of SFAS 141 and utilizing models associated with SFAS 142 to test for and measure goodwill impairment. It is vital to employ a valuation firm whose work will be accepted by auditors, whose reports and opinions prevail through scrutiny, and who will be available in the future should issues arise. MHP offers our clients all of this, while providing companies with independent, objective, and supportable valuation opinions.

The FASB issued further guidance on September 15, 2006 in SFAS 157, which outlines value to measure assets and liabilities.  The standard also responds to investors' requests for expanded information about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings.  The standard applies whenever other standards require (or permit) assets or liabilities to be measured at fair value.  The standard does not expand the use of fair value in any new circumstances and is effective with fiscal years beginning after November 15, 2007.