Question

What is the fair value of the net identifiable assets for spirited company

Answer 1

Solution =

IDENTIFIABLE ASSETS = An identifiable asset is an asset of an acquired company We can assigned fair value to it and it is beneficiaal to the purchaser company.

it can be both Intangible or tangible. But if any assets that are not identifiable are considered to be goodwill.

NET IDENTIFIABLE ASSETS =

In simplest definition Net Identifiable Assets represents the difference between total assets and total liability.Net Identifiable Assets consists of the assets acquired rom a comapany and its future benefit to the company is recognizable .

NIA is used for Purchase Price Allocation (PPA) and the calculation of Goodwill in Mergers and Acquisitions (M&A). The prefix “Net” here means after deducting the liabilities that also come along with the acquisition.

Components of Net Identifiable Assets> Identifiable assets are assets that are acquired Company except Goodwill .The amount of Goodwill is essential base of presumption and assumption and relative to the amount that an acquiring company paid hence not included net identifiable assets,

In accounting , Finance and Economics , Fair value is rational and unbiased estimate of the potencial market price of an asset. It takes into account such objective factors as cost of close substitute, replacement cost and market price in open market etc. Fair value is the price at which asset is exchange between knowledgeable parties at arm's length transaction

For example:

assets and liabilitities	balance sheet value	Adjustment	Fair Value
Intangible assets	$30	+ 10	40
Fixed assets	35	+32	67
Accumulated depreciation	(25)
Net fixed assets	55	+22	77
Long-term investments	25	+ 5	30
Inventories	35	-3	32
Accounts receivable	55	-5	50
Total assets	210	61	271
Long-term debt	40		40
Short-term debt	15		15
Accounts payable	25		25
Accrued expenses	10		10
total expenses	90		90

net identifiable value = $187

purchase consideration = $ 200

Goodwill = 200-187 = $13