FASB ASC 805 (previously SFAS No. 141R) requires that all assets and liabilities of the acquired company are adjusted to their Fair Values as of the date of acquisition when an acquisition is recorded. Often, this requires the independent valuation of the business interest (or assets), an allocation of the price to the identifiable tangible and intangible assets acquired, and to goodwill.
FASB ASC 350 (previously SFAS No. 142) requires companies to test whether there is an impairment of goodwill when an acquisition is recorded. Part of this analysis is comparing Fair Value of the invested capital with its Book Value. If the appraised value is less than the Book Value, the company must determine the extent of the impairment. Similar to the accounting when the acquisition is made, an independent valuation must be done allocating the value for the group to its tangible assets, intangible assets, and goodwill. The impairment is deemed to be the difference between the Book Value of goodwill and the value of goodwill determined by the independent valuation.
mba provides purchase price allocation valuations for compliance with ASC 805 and ASC 350 accounting rules.