The Case for Use of a Risk-Adjusted Rate in Damages Cases Robert Dunn and Everett Harry laid out a process for modeling and discounting future lost profits to present value in their article, Modeling and Discounting Future Damages. Not all experts agreed with the position presented by Dunn and Harry. In March, we revisited modeling and its level of acceptance. This article revisits the more controversial portion of the Dunn and Harry article, determining the discount rate. Dunn and Harry believed modeling the projected income stream reduced uncertainty and risk in an expert’s estimates. Therefore, they stated a lesser discount…
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Valuation of Intangible Assets Valuation practitioners may want to spend a few hours reading a recent U.S. Tax Court case where the valuation of intangible assets was squarely addressed. This QuickRead article highlights the facts and three issues addressed in the decision.
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In October 2015, the SEC adopted final rules governing the crowdfunding of startups and Regulation Crowdfunding was issued in May 2016. The new rules allow non-accredited investors to invest directly in startup (and other) companies that can raise up to one million dollars every twelve months through crowdfunding. Now, a year after Regulation Crowdfunding came into effect, Samantha Albert, senior financial analyst with Mercer Capital, takes a look at the state of crowdfunding. To read the full article in Mercer Capital’s Financial Reporting Blog, click: Crowded Out? This article is republished from Mercer Capital’s Financial Reporting Blog. It is reprinted…
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Fraudsters target people of all ages, but older adults with retirement savings are particularly lucrative targets. And the consequences of fraud and exploitation can have a devastating impact on older adults who depend on their retirement savings after they leave the workforce. Steve Vernon provides some very helpful tips towards preventing this despicable crime. To read the full article in CBS Money Watch, click: Six Ways to Fraud-Proof your Retirement Savings.
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FASB is considering making changes to the U.S. GAAP financial reporting taxonomy that would be intended to improve the taxonomy’s usability and the processes that support taxonomy-related activities. Ken Tysiac, JofA editorial director, explains. To read the full article in the Journal of Accountancy, click: FASB Assessing Efficiency, Effectiveness of GAAP Taxonomy.
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Context Matters This is the second of a two-part article. The first part, which addresses the efficient market hypothesis, is titled Proponents of the Efficient Market Hypothesis Always Want More Cowbell. Although many valuation practitioners are generally indifferent to context when valuing a business or asset, in litigation, as well as other areas that require valuation services, context matters. In this article, the author discusses how context and the market efficiency hypothesis shape contested valuations in various types of valuation-related disputes.
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Time to Evaluate Your Marketing Plans to Address Those Avoidable Mistakes In this article, Dr. Frederiksen describes five mistakes to avoid marketing a professional service organization.
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How do you get buyers and sellers to execute an M&A transaction when the prospects of an industry are extremely uncertain? Part of the answer may be to structure the deal in a way that defers payment of a (significant) portion of the purchase price in the form of contingent consideration. In this blog post, Sujan Rajbhandary, vice president, interviews Travis Harms, who leads Mercer’s valuation for financial reporting practice, to get his thoughts on the new valuation guidance. To read the full article in Mercer Capital’s Financial Reporting Blog, click: Q&A: New Guidance on Valuation of Contingent Consideration (Earnouts).…
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How to Form a Sound College-Savings Plan Early preparation is key for handling children’s college expenses. This article offers three pieces of advice for families, regardless of where they are in the savings process. Kelli Grant, personal finance and consumer spending reporter, offers some wise and helpful tips. To read the full article in CNBC, click: 3 Tricks to Crush College Planning and Save Big.
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Practices usually associated with startups have helped these seven employers of CPAs establish welcoming cultures and retain employees. From virtual workplaces to vacation stipends to having employees set their own hours, these innovative practices are helping employers drive productivity. Lea Hart, AICPA associate editor, explains. To read the full article in the Journal of Accountancy, click: Innovation Showcase: CPA Employers on the Cutting Edge.
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Ascertaining the Financial Status of a Business in a Few Quick Glances The 60-Second Method is a system of ascertaining the financial status of a business or other entity in a few quick glances. It is a training tool that can be used to demonstrate how financial analysis works, or instruct decision-makers beginning to read and understand financial statement content.
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New rules from the FASB regarding how entities will have to measure certain equity investments may lead to increased earnings volatility and additional fair value complexities. Lucas Parris, senior member of Mercer Capital’s Financial Reporting Valuation Group, discusses five things to know about the new rules and some questions to consider. To read the full article in Mercer Capital’s Financial Reporting Blog, click: 5 Things to Know about Fair Value and Equity Investments. This article is republished from Mercer Capital’s Financial Reporting Blog. It is reprinted with permission. To subscribe to the blog, visit: http://mercercapital.com/category/financialreportingblog/.
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An unfamiliar number, an unnatural pause after you say hello…another day, another irritating robocall. If it feels as if your cellphone has increasingly been flooded with them, you’re right. Christopher Mele explains. To read the full article in The New York Times, click: Robocalls Flooding Your Cellphone? Here’s How to Stop Them.
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Learn the formulas, functions, and techniques that enable efficient Benford analysis of data sets. J. Carlton Collins, Journal of Accountancy contributing editor, looks into this issue and provides some very useful tips and insights. To read the full article in JofA, click: Using Excel and Benford’s Law to Detect Fraud.
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The Objective and Subjective Tests Used to Determine Foreseeability To recover lost profits in a commercial damages case, three standards must be met. They are proximate cause, foreseeability, and reasonable certainty. Of these three, foreseeability is the lost profits standard in which a financial expert will have the least involvement. But this does not mean the expert’s work would not benefit the trier-of-fact in assessing foreseeability. This article will review the foreseeability standard and discuss how financial experts may be able to assist the trier-of-fact in considering this standard through their work addressing proximate cause and reasonable certainty.
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Always Want More Cowbell The More Cowbell skit can be repurposed to explain debates over the efficient market hypothesis. Many proponents of the efficient market hypothesis may initially find it annoying that nonbelievers do not share their view. However, believers’ faith in the efficient market hypothesis is dependent on nonbelievers continuing to try, but inevitably failing, to ‘beat the market.’ The efficient market hypothesis only works when investors can be ‘free riders’ that enjoy the fruits of nonbelievers’ labor, which make the market efficient. Thus, believers in the efficient market hypothesis should always want “more cowbell,” which in this context…
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Views Developed by an Appraiser Working with Business Brokers to Assess FMV Business appraisers typically assume that Price/Revenue, Price/SDE, Price/EBITDA and Price/EBIT, etc., are independent valuation methods. But, are they independent? This article shares my views on this subject matter and why they will lead to different conclusions of value.
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It seems like it was just last year when we mused if non-GAAP earnings measurements were becoming a permanent fixture of the market. How quickly the times change. Samantha Albert, senior financial analyst with Mercer Capital, explains. To read the full article in Mercer Capital’s Financial Reporting Blog, click: Compensating for Something: Facebook’s GAAP Change. This article is republished from Mercer Capital’s Financial Reporting Blog. It is reprinted with permission. To subscribe to the blog, visit: http://mercercapital.com/category/financialreportingblog/.
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The statute of limitation defines the time within which the IRS may initiate an audit of a tax return. According to Sec. 6501(a), the statute of limitation for income tax returns is three years from the filing date of the return or the due date if the return is filed early. Marilyn Young discusses the issue. To read the full article in The Tax Adviser, click: The Statute of Limitation for Net Operating Losses.
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First things first: Get out of bed. Once you’ve accomplished this, you’re ready for five more tips that can help you minimize interruptions, maximize your time, and make the most of working from home. To read the full article in AICPA Insights, click: 5 Tips to Make Working from Home Successful.