Wiley Guide to Fair Value Under IFRS

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John Wiley & Sons, Apr 9, 2010 - Study Aids - 400 pages
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Your one indispensable guide to all the Fair Value requirements of IFRS

Acomplete guide to the complex valuation requirements of IFRS, this book includes chapters on theoretical and practical applications, with extensive examples illustrating the required techniques for each application.

Appropriate for anyone involved professionally with finance—managers, accountants, investors, bankers, instructors, and students—this guide draws on a stellar panel of expert contributors from fourteen countries who provide international coverage and insight into a diverse range of topics, including:

  • Fair Value in implementing IFRS

  • Market Approach

  • Income Approach—Capitalization and Discounting Methods

  • Economic and Industry Conditions

  • Cost of Capital

  • Financial Statement Analyses

  • Impairment Testing

  • Intellectual Property Rights (patents, copyrights, trademarks)

  • Projecting Financial Statements

  • Liabilities

  • Customer Relationships

  • Share-based Payment

  • Plant and Equipment

Guide to Fair Value Under IFRS is the first international valuation book of its kind. Fully compliant with the Certified Valuation Analyst curriculum, it provides detailed guidance as to how fair value is to be determined and fills numerous gaps in common understanding of IFRS requirements.

 

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Contents

Recent Bubbles
The New Normal
Theme
INTRODUCTION
IMPORTANCE OF JUDGMENT
FAIR VALUE VERSUS FAIR MARKET VALUE
HOW DID WE GET HERE?
MARKET APPROACH FOR FAIR VALUE OF FINANCIAL INSTRUMENTS
FACTORS AFFECTING IPR VALUATION
APPLICATION TO PATENTS
CONCLUSION
INTANGIBLE ASSETS
SKILLS OF THE VALUATOR
RECONCILIATION TO ENTITY VALUE
VALUATION OF INTANGIBLE ASSETS FOR IFRS REPORTING PURPOSES
EXAMPLES

AUDITING FAIR VALUE
MARKTOMARKET ACCOUNTING AND FAIR VALUE
IMPLEMENTING FAIR VALUE
POSTSCRIPT
INTRODUCTION
CURRENT COST NEW
DEPRECIATION
COMBINING TYPES OF DEPRECIATION
COST APPROACH CONSIDERATIONS
INTRODUCTION
STANDARD AND PREMISE OF VALUE
CHOICE OF METHOD
GUIDELINE COMPANY METHOD
SELECTING VALUE MULTIPLES
MOST COMMON VALUE MULTIPLES
GUIDELINE SELECTION PROCESS
IMPLEMENTING THE GUIDELINE COMPANY METHOD
WEAKNESSES OF THE MARKET APPROACH
CONCLUSION
INTRODUCTION
ECONOMIC BENEFITS
WHICH EARNINGS TO CAPITALIZE?
NORMALIZATION ADJUSTMENTS
CAPITALIZATION RATE
INTRODUCTION
SELECTING INCOME STREAMS
SELECTING APPROPRIATE DISCOUNT RATES
CONCLUSION
INTRODUCTION
COMMON MISTAKES
WRITING
CONCLUSION
INTRODUCTION
DEFINING THE DOMAIN
UNIT OF ANALYSES
COST OF CAPITAL MODEL
TRILEVEL UNSYSTEMATIC RISK MODEL
MACROENVIRONMENT
FORCES
SUMMING UP THE MACROENVIRONMENT
DOMAIN
SUMMING UP THE DOMAIN
CONCLUSION
INTRODUCTION
TRADITIONAL ANALYTICS
QUANTITATIVE ANALYTICS
OPERATING METRICS
MANAGEMENTS RESPONSE TO THE EXTERNAL CONTEXT
BENCHMARKING STRATEGY IMPLEMENTATION
INTRODUCTION
COST OF EQUITY METHODS
PUBLISHED BETAS
APPLICATION OF CAPM
ARBITRAGE PRICING THEORY
FAMAFRENCH THREEFACTOR MODEL
BUILDUP MODELS
RISK RATE COMPONENT MODEL
IMPLIED COSTOFCAPITAL MODELS
WEIGHTED AVERAGE COST OF CAPITAL
REFERENCES
INTRODUCTION
IBBOTSON BUILDUP MODEL
RRCM
CONCLUSION
APPENDIX
ADDITIONAL RESOURCES
INTRODUCTION
COMPARATIVE ANALYSES
DATA SOURCES
ADJUSTMENTS
OTHER MEASURES
FREE CASH FLOW
RATIO AND TREND ANALYSES
DISAGGREGATION
OTHER ANALYSES
INTRODUCTION
INFORMATION REQUIREMENTS AND DATA COLLECTION
ADJUSTING HISTORIC DATA
HISTORIC VALUE DRIVERS AND FINANCIAL MODELING
VALUE DRIVERS AND PROJECTED FINANCIAL STATEMENTS
UNCERTAINTY IN DATA
INTRODUCTION
VALUE CONCEPTS IN IMPAIRMENT TESTING
ALLOCATION OF GOODWILL TO CGUS OR GROUPS OF CGUS
DETERMINATION OF INPUT FACTORS
CONCLUSION
INTRODUCTION
VALUATORS FUNCTION
RELEVANT ISAS
DISREGARDING VALUATIONS
CONCLUSION
INTRODUCTION
COPYRIGHTS AS INTERNATIONAL ASSETS
COPYRIGHTS AS FINANCIAL ASSETS
REPORTING STANDARDS
VALUATION PROCESS
INTERNALLY CREATED ASSETS
DIGITAL COPYRIGHTS
ENFORCING COPYRIGHTS
INTRODUCTION
RANGE OF RELATIONSHIPS
RELEVANT IFRS LANGUAGE
VALUE INDICATORS
VALUATION METHODOLOGIES
EXAMPLE
CONCLUSION
INTRODUCTION
OVERVIEW OF IFRS 7 IAS 32 AND IAS 39
CASE STUDY
VALUATION OF THE DEBT COMPONENT
SUMMARY
CONCLUSION
INTRODUCTION
DOMAIN NAMES IN LAW AND UNDER IFRS
RISE AND FALL OF DOMAIN NAME VALUES
VALUATION PROCESS
CASE STUDY BACKGROUND
CASE STUDY ANALYSES
INTRODUCTION
DEFINITION OF HEDGING
IS THE RISK HEDGEABLE?
ASSURING INTEGRITY OF FUTURE CONTRACTS
REQUIRED MARGINS
PROBLEMS WITH FUTURES CONTRACTS
VALUING FUTURES CONTRACTS
HEDGING WITH OPTIONS
ACCOUNTING FOR HEDGES
SOUTHWEST AIRLINES SITUATION
INTRODUCTION
VALUATION PYRAMID
HIERARCHY OF VALUING INTANGIBLES
DEFENSIVE INTANGIBLE ASSETS
VALUATION PROCESS
INTRODUCTION
DEFINITIONS
LEVERAGED LEASES
RETURN ENHANCEMENT
EFFECT OF LEASING ON VALUE
CONCLUSION
INTRODUCTION
BORROWERS
NATURE OF BONDS
VALUATION OF BONDS
YIELD TO MATURITY
CREDIT RISK
VALUATION OF SPECIAL OBLIGATIONS
CONCLUSION
INTRODUCTION
INTERNATIONAL ORIENTATION
EFFECTS OF THE RECENT FINANCIAL CRISIS
APPLICATION OF THE METHOD
INVENTORIES
XANTHIC AS
CONCLUSION
INTRODUCTION
SOURCES OF VALUE
VALUATION METHODOLOGIES
APPLICABLE TECHNIQUES
CONCLUSION
INTRODUCTION
VALUATION CONSIDERATIONS
COMPARABLE CAPITALIZATION RATE
SALES OF PASSTHROUGH ENTITIES
CONCLUSION
INTRODUCTION
PORTFOLIO ACTIVITIES
VALUING PATENTS
PATENT PORTFOLIOS
APPROPRIATE METHODS
ILLUSTRATIVE EXAMPLES
RELIEFFROMROYALTY METHOD
RESIDUAL VALUE METHOD
ASSETSPECIFIC RATES OF RETURN
CONCLUSION
INTRODUCTION
OIL RESERVES
RESERVE STUDIES
WORKING INTEREST
ROYALTY INTEREST
DISCOUNTING CASH FLOWS
INTRODUCTION
DRUG DEVELOPMENT PROCESS
VALUATION STANDARDS AND METHODS
VALUATION METHODS
KEY VARIABLES FOR VALUATION
INTRODUCTION
VALUATION OF PLANT AND EQUIPMENT
MARKET APPROACH
INCOME APPROACH
COST APPROACH
CONCLUSION
INTRODUCTION
DETERMINANTS OF RETAIL VALUE
PERFORMANCE OF RETAIL DEVELOPMENTS
COMMUNITY SHOPPING CENTERS
CONCLUSION
INTRODUCTION
MAJOR SHAREBASED TRANSACTIONS
VALUATION OF EMPLOYEE SHARE OPTIONS
COMMONLY USED OPTION PRICING MODELS
VALUATION OF UNDERLYING SHARES
VALUATOR AND SHAREBASED PAYMENTS
INTRODUCTION
COMPUTER SOFTWARE
MARKET APPROACH
INCOME APPROACH
COST APPROACH
CONCLUSION
INTRODUCTION
PROTECTION
KNOWHOW AND TRADE SECRETS ARE VALUABLE ASSETS
WHEN TO VALUE INTANGIBLE ASSETS
VALUATION METHODS
TECHNOLOGY JOINT VENTURES
CONCLUSION
INTRODUCTION
ACCOUNTING SITUATION
TRADEMARK INFRINGEMENT
IMPORTANCE OF BRANDS AS ASSETS
BRAND VALUATION
SELECTED APPLICATIONS
VALUATION METHODOLOGIES
FAIR VALUE FOR IFRS
EXAMPLES
INTRODUCTION
NECESSARY ANALYSES
INTANGIBLE ASSETS
PRICING METHODS
COMPARABLE UNCONTROLLED PRICE
COST PLUS METHOD
PROFIT SPLIT METHOD
TRANSACTIONAL NET MARGIN METHOD
GLOBAL APPORTIONMENT
INTRODUCTION
SOURCES
PROJECTING FINANCIAL STATEMENTS
PROJECTING FINANCIAL STATEMENTS
COST OF CAPITAL
MINERAL PROPERTIES
PASSTHROUGH ENTITIES
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About the author (2010)

JAMES P. CATTY, MA, CPA/ABV (U.S.), CA-CBV (Canada), CVA, CFA, CFE, has been engaged in business valuations around the world for more than fifty years and has undertaken speaking engagements in China, Germany, Romania, Taiwan, Turkey, the UK and the United States. He is Chairman and co-CEO of the International Association of Consultants, Valuators and Analysts (IACVA) with members in twelve countries (NACVA is the U.S. Charter); President of Corporate Valuation Services Limited (CVS), Toronto; and, of Counsel to Hanlin Moss PS, Seattle, Washington and Xian China.

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