BV196 Valuation of Inventory: Simplifying All of the Guidance

Webinar Description

With divergence in practice and varying sources of guidance, inventory valuation can often seem daunting. In this webinar, we will propose simple, straightforward modifications to the valuation of inventory that you can incorporate into your valuation process.

We will first review what comprises the book value of inventory and valuation guidance from the FASB, the IRS, and the AICPA. Next, we will walk through an example valuation of raw materials, work-in-progress, and finished goods in accordance with this guidance. The example provided will reconcile the top-down (comparative sales) and bottom-up (cost of reproduction) methods. Finally, we will illustrate how to account for product- and process-specific profit and expenses, reconcile to market participant data, and adjust supporting assets so as to not double-count profit.

Recommended Pre-Readings

Working Draft of Inventory Valuation Guidance from Forthcoming AICPA Accounting and Valuation Guide Business Combinations

Accounting Today: A Refined Approach to Inventory Valuation (https://www.accountingtoday.com/opinion/a-refined-approach-to-inventory-valuation)

Webinar Audience

Valuation specialists and other parties interested in performing inventory valuation analyses (under Fair Market Value and Fair Value Standards).

Instructor Information

Anthony Pumphrey, ASA | Vice President | Valuation Research Corporation

Anthony Pumphrey, ASA, CFA is Vice President of Valuation Research Corporation. Mr. Pumphrey has 10+ years of experience performing business enterprise valuations, purchase price allocations, impairment analyses, and the valuation of claims within complex capital structures for public and private companies under IRC 409a, ASC 350, ASC 360, ASC 718, ASC 805, ASC 820, and ASC 852. Prior to joining VRC, Mr. Pumphrey was with Hempstead & Co., where he provided valuation opinions for estate and gift tax planning, financial reporting, employee stock ownership plans, litigation support, and the issuance of incentive stock options.

Learning Outcomes

Upon webinar completion, the participant will be able to:

• Understand what is included in the book value of inventory, prior to valuation;
• Implement the guidance into the valuation process in a straightforward manner;
• Apply the comparative sales and cost of reproduction methods and clearly identify the components of the step-up; and
• Reconcile the step-up components, supporting assets, and overall analysis with other remaining assets in a business combination.