Takeaways from the ASA Fair Value Conference

BVWireIssue #237-4
June 29, 2022

goodwill, fair value, fair value measurements, goodwill impairment, impairment testing, intangible, accounting, financial accounting standards board (FASB)

The 2022 ASA NY Fair Value Conference was held in hybrid form (online and in-person from Hoboken, N.J.) on June 16, and here are some takeaways:

  • The FASB has removed from its active agenda its project that was considering whether annual goodwill impairment tests should be done away with for public companies in favor of a new model that would include amortization (see last week’s issue for details);
  • The most common mistake in developing cost of capital for a foreign entity is a mismatch between the discount rate and the currency underlying the forecast;
  • There is currently no empirical support for including environmental, social, and governance (ESG) factors in the cost of capital—any impacts should be reflected in cash flows;
  • It is believed that the new AICPA guide to business combinations will be released before the end of this year;
  • Guidance is being developed for estimating a discount rate for fair value measurements for intangible assets;
  • Inflation estimates for the U.S. over the long-term rose from 2.0% in June 2020 to 2.6% in May 2022; and
  • Recent SEC guidance on SPAC warrant classification have put these entities under the microscope and resulted in a number of restatements.

More details on the sessions will be included in the August issue of Business Valuation Update.

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