Goodwill and intangible assets may represent a considerable portion of a company’s net worth, and changes to Financial Accounting Standards Board (FASB) rules for treating these two items has a significant effect on the valuation of many companies. The recent Statement of Financial Accounting Standards No. 141 (SFAS) requires all business combinations to be valued using the purchase method of accounting, and specifically prohibits use of the pooling-of-interests method. It also provides general guidelines for allocating the purchase costs to plant, property and equipment; identifiable intangible assets, and goodwill based on the fair market value.
The Securities and Exchange Commission (SEC) and accounting firms have relied on Frazier Capital’s values of fixed and intangible assets for audit purposes in the past. They have also used our estimates of concerned assets’ remaining years of life for depreciation and amortization calculations.
The SFAS No. 142 and SFAS 144 provide clear guidelines on recognizing asset impairment for goodwill as well as intangible and other assets. Frazier Capital provides detailed analyses on whether impairment recognition is required. If it is, we determine the fair value of assets held for use in the business and conclude the net realizable value of assets held for sale.
Stock Option Valuation
SFAS No. 123 provides guidelines on valuing stock options, which are completed using such option-pricing models as Black-Scholes. Frazier Capital has valued executive stock options for financial reporting under the required guidelines. We perform complete analysis of our client’s history, current strategies and forecasts before offering conclusive values on the stock options.