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Wee v. Yangzhou Putian Shoemaking Co. (In re Unimex Corp.)

An expert’s report on debtor’s insolvency was excluded under Fed. R. Evid. 702 because the expert’s 50% discount of inventory value was a flawed assumption given that the debtor was not being liquidated and was not on its deathbed, but instead was a going concern.

Expert’s Testimony Is Excluded as to Solvency—Adjustments to the Balance Sheet of Debtor Were Inappropriate

An expert’s report on debtor’s insolvency was excluded under Fed. R. Evid. 702 because the expert’s 50% discount of inventory value was a flawed assumption given that the debtor was not being liquidated and was not on its deathbed, but instead was a going concern.

Court’s valuation is out of bounds

In an Indiana divorce case, the subject company was a gift shop and boutique the wife owned.

Gutierrez v. Padilla

The plaintiffs bought two automotive supply businesses from the defendant. The plaintiffs alleged that the defendant and the defendant’s broker made representations about the condition of the businesses during the sale and breached various terms of the sale contract. The district court dismissed complaints against the defendant’s broker and awarded damages to both parties regarding alleged actions in regard to the sale contract. The appeals court affirmed the district court’s decisions.

New Mexico Appeals Court Affirms Awards of Damages to Both Parties on Claims of Breach of Contract

The plaintiffs bought two automotive supply businesses from the defendant. The plaintiffs alleged that the defendant and the defendant’s broker made representations about the condition of the businesses during the sale and breached various terms of the sale contract. The district court dismissed complaints against the defendant’s broker and awarded damages to both parties regarding alleged actions in regard to the sale contract. The appeals court affirmed the district court’s decisions.

Johnston v. Vincent

The plaintiffs and defendants in this case, upon appeal to the Supreme Court of Louisiana, appealed certain rulings of the Louisiana Court of Appeals. The defendants asserted that the Court of Appeals failed to apply the manifest error standard correctly in reversing the district court’s findings of what constituted trade secrets and their misappropriation. The Supreme Court reversed the Court of Appeals on this issue. The Supreme Court also reversed the Court of Appeals as to the increase in the amount of lost profits damages. The Supreme Court also affirmed the Court of Appeals in its determination that actual damages must be trebled and that unjust enrichment damages must be awarded in some amount but were not to be trebled.

Louisiana Supreme Court Reverses Appellate Court as to Misapplication of the Correct Manifest Error Standard, Other Damages-Related Issues

The plaintiffs and defendants in this case, upon appeal to the Supreme Court of Louisiana, appealed certain rulings of the Louisiana Court of Appeals. The defendants asserted that the Court of Appeals failed to apply the manifest error standard correctly in reversing the district court’s findings of what constituted trade secrets and their misappropriation. The Supreme Court reversed the Court of Appeals on this issue. The Supreme Court also reversed the Court of Appeals as to the increase in the amount of lost profits damages. The Supreme Court also affirmed the Court of Appeals in its determination that actual damages must be trebled and that unjust enrichment damages must be awarded in some amount but were not to be trebled.

Appellate court rules on valuation of inventory in Sears bankruptcy

Sears (the Amazon of its day) recently emerged from bankruptcy after four years and thousands of court filings.

ESL Invs., L.P. v. Sears Holdings Corp. Debtor-Appellee (In re Sears Holdings Corp.)

Second-lien holders, entitled to payment only after the debts of first-lien holders have been discharged, argued that the value of the collateral that secured their claims, as measured on the petition date, vastly exceeded what they had been paid and that they were accordingly entitled to priority payment of the difference. At trial, all parties put on evidence as to the value of the assets at the petition date. The differences varied widely. “The differences among these values turned primarily on how the experts calculated the revenue Debtors could expect to earn from selling their inventory.” The appeal dealt primarily with this inventory issue and how it should be valued.

Valuation of Inventory Key to Decision on Collateral Value in Bankruptcy

Second-lien holders, entitled to payment only after the debts of first-lien holders have been discharged, argued that the value of the collateral that secured their claims, as measured on the petition date, vastly exceeded what they had been paid and that they were accordingly entitled to priority payment of the difference. At trial, all parties put on evidence as to the value of the assets at the petition date. The differences varied widely. “The differences among these values turned primarily on how the experts calculated the revenue Debtors could expect to earn from selling their inventory.” The appeal dealt primarily with this inventory issue and how it should be valued.

Wholesale Trade: Sales and Inventories

In the May issue of the Economic Outlook Update (EOU), the publication added data highlighting the wholesale trade segment of the U.S. economy, putting a spotlight on the data the U.S. Census published. The report highlights the sales totals of merchant wholesalers for April 2021, which included adjustments for seasonal variations and trading day differences. The report showed an improvement in wholesale trade in April 2021 when compared to March 2021 and from one year ago. In April, total sales were $570.8 billion, or 0.8% higher than the revised March level and 43.6% higher than the level from one year ago.

Valuation of Inventory: Taking Stock of the Guidance

Given divergences in both practice and guidance, inventory valuation can seem challenging. In this webinar, Anthony Pumphrey will illustrate simple, straightforward modifications to the valuation of inventory that you can incorporate into your valuation process. Review what comprises the book value of inventory and valuation guidance from the FASB, the IRS, and the AICPA. Next, walk through an example valuation of raw materials, work-in-progress, and finished goods in accordance with this guidance. The example provided ...

The Balance Sheet and its Correlation to Company Specific Risk

The pandemic is teaching us that businesses, small and large, and their balance sheets are important not just from handling a pandemic, but also from sustaining operations. Understanding assets, and which matter, will help analysts determine the specific company risks. Expert Josh Shilts discusses which categories are important in understanding risk and what ratios and other analyses can be used to measure risk. Identifying and linking balance sheet financials to company-specific risk is a critical ...

Comment period on inventory valuation guidance open until 30 June

The International Valuation Standards Council (IVSC) has extended the comment period to 30 June for its IVS 230—Inventory Exposure Draft.

Global BVU News and Trends April 2020

Business valuation news from a global perspective.

30 April deadline for comments to IVSC on IVS 230—valuing inventory

The IVSC’s newest IVS 230 Inventory Exposure Draft tackles several themes, with particular attention to changes in the top-down method.

Global BV News: IVSC issues exposure draft on inventories

The International Valuation Standards Council (IVSC), the independent standard-setter for the global valuation profession, has issued proposed new standards for the valuation of inventory.

Exposure draft on valuing inventory open for comments through 30 April

The IVS 230 Inventories Exposure Draft was issued last week and is now in consultation for two months until 30 April.

BVU News and Trends April 2019

A monthly roundup of key developments of interest to business valuation experts.

Reminder: Comments due on inventory guidance

In November 2018, the AICPA’s Financial Reporting Executive Committee (FinREC) issued an early working draft of inventory valuation guidance, which is part of a broader forthcoming release of the AICPA’s “Business Combinations Accounting and Valuation Guide.”

AICPA extends comment period for inventory valuation guidance

In November 2018, the AICPA’s Financial Reporting Executive Committee (FinREC) issued an early working draft of Inventory Valuation guidance, which is part of a broader forthcoming release of the AICPA’s “Business Combinations Accounting and Valuation Guide.”

Work File Checklist for Documenting the Fair Value of Inventory

A practice aid based on the Mandatory Performance Framework (MPF) for the Certified in Entity and Intangibles Valuation (CEIV) credential.

BVU News and Trends January 2019

A monthly roundup of key developments of interest to business valuation experts.

AICPA issues inventory valuation guidance

The AICPA’s Financial Reporting Executive Committee has issued an early working draft of Inventory Valuation guidance and would like feedback by Feb. 1, 2019.

A Primer on Bargain Purchases and Negative Goodwill

When a change of company control occurs, such as an acquisition, a valuation of the assets acquired must be performed to be compliant with generally accepted accounting principles, as mandated by the Financial Accounting Standards Board (FASB) and addressed in Accounting Standards Codification (ASC) 805: Business Combinations. This type of exercise is commonly referred to as a purchase price allocation, since the purchase price of the subject company is allocated across all tangible and intangible ...

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