Valuation Glossary

The Income Approach is a method used to determine the value of a business or investment based on its expected income. It focuses on the income or cash flow the business is expected to generate in the future. This approach assumes that the value of a business is tied to its ability to generate income. Different techniques, like discounted cash flow or capitalization of earnings, are used to estimate the present value of future income. The Income Approach is useful for valuing businesses that generate consistent income and helps assess their profitability and investment potential.

Impairment of goodwill occurs when the carrying value of goodwill on a company’s balance sheet exceeds its fair value, indicating that the value of the acquired business has declined.

Identifying the acquirer involves determining which entity is the buyer in a business combination. The acquirer is typically the entity that obtains control over the other entity.

Identifiable assets acquired refer to specific assets that a company obtains when it purchases another company or its business units. These assets can be individually recognized and valued. Identifiable assets include both tangible assets (like equipment, inventory, and buildings) and intangible assets (like patents, trademarks, and customer relationships).

Held to maturity (HTM) securities are financial assets that a company intends and is able to hold until they reach their maturity date. These are typically fixed-income investments like bonds, which pay periodic interest and return the principal amount at maturity.