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Fair Value of Unquoted Shares under FRS 109: A Practical Programme for Accountants and Auditors

Expert Speaker Ong Woon Pheng

$650.00 (including GST)

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EARLY BIRD SPECIAL: Save 10% when you register by 23 February 2018. Use code FEB18 at checkout.

Overview

With effect from 1 January 2018, FRS 109 Financial Instruments will replace FRS 39. FRS 109 covers, amongst other things, the classification and measurement requirements for financial assets and liabilities.

One of the significant changes is how unquoted equity instruments are accounted for. Specifically, the new standard removes the ability to measure unquoted equity investments at cost where fair value cannot be determined reliably. In other words, investments in equity instruments must be measured at fair value under FRS 113 Fair Value Measurement.

This practical workshop is part of the Corporate Practice Series, designed specifically to provide Accounting and Finance Professionals a concise coverage of fair valuing unquoted equity instruments. An in-depth discussion on business valuation approaches and methods will be included. The objective is not only to equip participants with technical skills and knowledge, but also to apply key valuation concepts in practice by attempting a case study.

What you’ll learn

At the end of this workshop, you will:

  • Be able to explain when equity investments are accounted for under FRS 109
  • Be able to Identify the various types of business valuation methods and select the most appropriate one
  • Be able to apply commonly used valuation methods for business interest
  • Be able to appraise the fair value of an unquoted equity investment

Programme Outline

1. Introduction to FRS 109

  • Scope exclusions from financial instrument standards
  • Classification of financial assets
  • Classification of equity instruments
  • Measurement of unquoted equity instrument

2. Overview of Fair Value Measurement

  • Determine the asset that is being measured
  • Determine the valuation premise
  • Determine the market
  • Determine the valuation techniques for measuring fair value
  • Determine the fair value

3. Valuation Approaches & Methods

  • Principal valuation approaches
    • Market approach
    • Income approach
    • Cost approach
  • Selection process
  • Levels of value
  • Discount for lack of control (DLOC) and control premium
  • Control premium study
  • Factors influencing DLOC
  • Discount of lack of marketability (DLOM)
  • Pre-IPO study by Emory
  • Restricted stock studies
  • Factors influencing DLOM

4. Market Approach

  • Circumstances where market approach should be applied
  • Comparable transactions method (including prior transactions method and prior listings method)
  • Guideline publicly-traded comparable method
  • Key steps
  • Choosing publicly-traded comparables
  • Key valuation metrics
  • Comparative analysis
  • Adjustment of valuation metric

5. Income Approach

  • Circumstances where income approach should be applied
  • Discount cash flow method
  • Key steps
  • Type of cash flow
  • Cash flow forecast
  • Discount rate

6. Cost Approach

  • Circumstances where cost approach should be applied
  • Summation method
  • Key steps
  • Component assets and liabilities

7. Valuation Conclusion

  • Reconciliation values
  • Conclusion of value

Participants are encouraged to bring along their financial calculators

This workshop qualifies for 7.0 CPE hours in Financial Reporting Standards and Pronouncements (Category 1).

Expert Speaker

Ong Woon Pheng

CA (Singapore), FCCA, CFA, CFE, ICVS, ATP (Income Tax)

Woon Pheng is the Director of Financial Advisory Services at PKF-CAP, a member firm of PKF International Limited. He has worked on engagements in financial reporting, business valuation, valuation for financial reporting, corporate secretarial, corporate and personal taxation, forensic accounting, litigation support, internal audit, merger and acquisition transactions, financial due diligence, liquidation and corporate restructuring.  In 2015, he was conferred the Teaching Merit Award by SIM University. He has been appointed as master workshop facilitator and technical reviewer for the Financial Reporting module of the Singapore CA Qualification. He also serves as a member of ACCA Singapore Professional Expert Forum.

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