Steps for Purchase Price Allocations (from the business value and intangible asset perspective) 1. Determine Fair Value of consideration   a) Cash   b) Notes   c) Equity   d) Earn-Out 2. Develop cost of capital for enterprise valuation 3. Conduct enterprise valuation to check reasonableness of consideration and evidence of Bargain Purchase 4. Conduct valuation analysis and allocate purchase price to various “Reporting Units” since goodwill is determined at this level 5. Identify intangible assets acquired   a) Trade Name / Trade Marks   b) Proprietary Technology   i)  Patented   ii) Non-Patented   c) Developed Software   d) Vendor Relationships   e) Favorable Leases   f) Covenants Not to Compete   g) Employee Contracts   h) Customer Relationships   i)  Contractual   ii) Non-Contractual   i) Assembled Workforce (contributory asset to primary assets; part of goodwill) 6. Identify primary intangibles and contributory tangible and intangible assets 7. Determine appropriate value approaches for each identifiable intangible asset   a) Cost   b) Market   c) Income   d) Combination 8. Develop cost of cpaital for identified contributory assets   a) Fixed Assets   b) Working Capital   c) Other Intangible Assets 9. Develop Fair Value for contributory assets   a) Determine estimated remaining life   b) Apply appropriate discount rates based on cost of capital 10. Develop Fair Value for primary assets   a) Determine estimated remaining life   b) Calculate contributory assets charges   c) Apply appropriate discount rate based on cost of capital 11. Fixed asset Fair Value analysis is somewhat of an iterative process since Fair Value of fixed assets depends, in part, from amount available for those assets based upon the level of economic support 12. Residual of enterprise value (or consideration) after deducting Fair Value of all assets aquired equals goodwill 13. Develop IRR (Internal Rate of Return) analysis 14. Develop WARA (Weighted Average Return on Assets) analysis 15. Develop WACC (Weighted Average Cost of Capital) analysis 16. Compare WARA, IRR and WACC, if significant differences are apparent, seek to resolve 17. Get psychologically prepared for the auditor’s questions, saying “yes”, “no”, “good thought” Steps for Purchase Price Allocations (from the tangible asset valuer’s perspective) One way to do it, call it “top down financial perspective” 1. Get a preliminary indication if it is a bargain purchase or not; discuss with financial appraiser 2. Review if tax oriented or earnings oriented with the CFO or his/her representative 3. Discuss strategies depending upon answer 4. Review quality of fixed asset record: awful, fair, good, great 5. Inter-relate fixed asset accounting strategies with tax or earnings oriented objectives 6. Discuss with CFO what to do about fixed asset record: keep, adjust, make anew 7. Do the real property appraisal and tangible personal property appraisal accordingly a. On the real property prepare only the Cost Approach, consider physical deterioration and functional obsolescence, but not economic obsolescence (yet) b. On the tangible personal property prepare the Cost Approach, considering excess capital cost, physical deterioration and functional obsolescence, but not economic obsolescence (yet), or for assets with an active used market consider such information appropriately 8. Relate / inform the intangible asset appraiser of preliminary tangible asset values as one goes along, and then discuss and inter-relate final tangible / intangible value information working together 9. Set up the fixed asset record to value the assets “fully” or alternatively “squeeze down” the tangible assets within the level of economic support 10. Prepare the narrative for the report as a draft for the auditor’s review 11. Prepare the asset listing for the report as a draft for the auditor’s review 12. Possibly submit to the auditor the fixed asset model and data file 13. Go through the auditor’s review, adjust as agreed upon narrative, values and fixed asset record 14. Send over to the CFO the fixed asset data file for uploading into their fixed asset accounting system 15. Again, get psychologically prepared for the auditor’s questions, saying “yes”, “no”, “good thought” Ancillary services which may be considered during and/or after a Fair Value accounting related appraisal / valuation may  be the following: • Ad Valorem (Property) Taxation: “Clean” the existing fixed asset record utilized for developing the tangible personal property rendition. “Cleaning” means to remove non- value assets, environmental exclusions, incorrectly classifed assets, and more. • Fixed Asset Accounting: Upload the developed date for the “new” fixed asset record. Set up processes for perpetuation of the new Fixed Asset Accounting System. • Consider developing component and/or cost segregation values for financial reporting and income tax reporting. • Insurance Placement and Proof of Loss: Develop the appropriate insurance placement values, as well as generate the asset detail for asset listing perpetuation and annual value updating. • Tag possible the subject tangible personal property for matching to the new fixed asset accounting record. This is for the general purposes of Ad Valorem taxation, financial auditing, insurance maters, as well as for overall asset control and information.           Fair Value Discussion, Debates, Conflicting and Complementing Statements • Cost basis of accounting, or change the world to being piecemeal market based • Matching Principle, very basic to our system of accounting • Mark to market, is this nonsense from the “ivory tower” accountants, means what • Balance sheet should reflect market values, used or in continued use • Market evidence, can support anything • Used market does not reflect in-use values • Bargain purchase, how to calculate, by business valuation or excess over sum of value of assets • How to calculate economic obsolescence, from the