Valuation

Introduction

Purchase price allocation in accordance with IFRS 3, impairment tests and "fair value accounting" require that an auditor possesses considerable skills in valuation.

In accordance with IFRS 3, the buyer must measure the total acquisition cost and allocate this cost to the acquired assets, both tangible and intangible, to obligations and to contingent liabilities. Under IAS 36, an entity shall conduct tests for impairment of its assets to check if the firm has incurred in impairment losses. In recent years, accounting standards have had an increasing focus on "fair value accounting".

An auditor is also often asked to help with valuations in connection with generational changes, mergers, forced redemption of shares and so forth.

This course provides students with a solid theoretical basis for conducting valuations and will engage the students in thorough discussions on how the measurements are carried out in practice.

Course content

1. Value and value components in a firm.
2. Financial risk.
3. Risk adjustment of cash-flow.
4. Required rate of return.
5. Profitability analysis.
6. Forecasting of cash flows.
7. Cash-flow-based valuation models.
8. Income-based valuation models.
9. Valuation using multiples.