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Description
With the pervasive use of current cost measurement (e.g. fair value and value in use) in financial reporting, fair value accounting is often under-estimated.
Impairment testing for goodwill is required to be carried out annually, and this entails estimating the value in use, and sometimes fair value, of cash-generating units (CGUs).
When a business is being acquired, a purchase price allocation under FRS 103 Business Combinations requires the acquirer to fair value identifiable assets acquired and liabilities assumed in an acquiree.
With effect from 2018, FRS 109 Financial Instruments requires unquoted equity investments to be fair valued – the option to measure it at cost is no longer permitted.
A case study and practical examples will be used to provide participants with the opportunity to apply various valuation approaches and methods to different types of assets including businesses, financial instruments and intangible assets. In addition to covering fair value measurement under FRS 113, the trainer will also share real life experiences and challenges in applying fair value accounting in financial reporting.
Programme Outline
Relevance of valuation in FRS
- Impairment of assets
- Business combinations
- Financial instruments
- Share-based payments
- Investment properties
- Agriculture
- Non-current assets held for sale
- Leases
Fair Value Measurement Framework
- Unit of account
- Valuation premise (including highest and best use)
- Markets for basis of valuation
- Valuation approaches (namely market, income and cost approach) and techniques
- Fair value (premiums and discounts)
Calculating Value in Use
- Objective, scope and basic principles of impairment
- Assessing reasonableness of forecast by management
- Estimating future cash flows
- Determining an appropriate discount rate
- Estimating terminal value
- Computing net present value
- Establishing the carrying amount of CGUs
- Recognition of impairment losses
Fair Valuing Unquoted Equity Investments
- Classification and measurement of unquoted equity investments
- Market approach methods
- Sources of data
- Key steps in Guideline Publicly-Traded Comparable Method
- Identify relevant comparables
- Identify key valuation metrics
- Perform comparative analysis
- Adjustments to valuation metrics
Fair Valuing Intangible Assets
- Overview of a business combination
- Types of intangible assets
- Valuation methods commonly used for intangible assets
- Key steps in Relief-from-Royalty Method
- Determining an appropriate discount rate
- Consideration of economic life
- Tax amortization benefit (TAB)
Participants are encouraged to bring along their financial calculators.
This workshop qualifies for 7.0 CPE hours in Financial Reporting Standards and Pronouncements (Category 1).
Target Audience
Accountants, Auditors, Finance Professionals and anyone interested in the practical application of fair value in financial reporting
Expert Speaker
Ong Woon Pheng
CA (Singapore), FCCA, CFA, ICVS, CFE , ATP (Income Tax)
Woon Pheng is the Director of the Financial Advisory Services at PKF-CAP, a member firm of PKF International Limited. He specialises in business valuation, valuation for FRS (including purchase price allocation, impairment review and valuation of intangible assets and financial instruments), financial and tax due diligence, divestment of business, mergers and acquisitions (M&A), fraud investigation, assessment of damages, expert witness and liquidation.
Woon Pheng is involved in various roles in the Singapore CA Qualification. As an adjunct faculty of Singapore University of Social Science ( SUSS ), he teaches business valuation, financial reporting and corporate finance related subjects . In 2015, he was conferred the Teaching Merit Award by SUSS. He also serves as a member in ISCA’s Investigation and Disciplinary Panel and the ACCA Singapore Professional Expert Forum.