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Technical Research and Support

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Sometimes questions arise over areas that are new to your company, but common to other companies. Other times, the transaction is completely unique. It may require in-depth analysis and may even lead to discussions with the SEC and a pre-clearance or no action letter from them.

In all cases, we’ll first take time to understand the facts surrounding the issue.

If it’s an unusual transaction for your company, but other companies deal with it regularly (for example, it might be the first time you’re issuing stock options), then we may just provide you with templates and standard financial statement disclosure used by other companies. Sometimes, if there is a little nuance to your issue, we may provide a technical memo for your auditors on that piece of it.

If the issue is not common for other companies, we will search through the various authoritative literature, whether it’s from the SEC, FASB or AICPA, and develop a position for your specific fact pattern.

We will document the position, and authoritative support for the position, in a detailed technical consulting memo that we will then discuss with you.

When we receive approval from you, we will then go over it with your auditors to make sure they are in agreement. Occasionally, they will have a different opinion on the issue. If this happens, we will work with you and them to come to a mutually agreeable position on the matter.

A sample of recent areas we’ve dealt with include (in order of appearance in financial statements):


  • Application of labor and overhead – inventoriable costs
  • Relief of inventory
  • Net realizable value / impairment
  • Approaches to unobserved opening inventory valuations


  • Capitalization of development costs
  • Amortization
  • Impairment
  • Revenue recognition
  • Reimbursed research and development costs

Intangible Assets

  • Determination of whether to amortize
  • Impairment


  • Allocation of proceeds
  • Beneficial conversion feature
  • Embedded and stand-alone derivatives
  • Contingencies
  • Troubled debt restructuring


  • Beneficial conversion feature
  • Classification of redeemable preferred stock
  • Embedded and stand-alone derivatives
  • Recapitalizations
  • Stock splits and reverse splits
  • Non-monetary contributions by founders or other shareholders

Options and Warrants

  • Definition of an active market
  • Determining volatility without an active market
  • Determining appropriate forfeiture rates
  • Truing-up the forfeiture rate
  • Determining methodology for arriving at market value for common
  • Modifications

Earnings Per Share

  • Impact of dividends
  • Two-step method

Mergers and Acquisitions

  • Reverse mergers
  • Purchase price allocations (forward acquisitions)
  • Push down accounting
  • Impact on the statement of cash flows
  • Determining the acquirer
  • Definition of a business
  • Determining if the transaction is a business combination
  • Acquisition of a minority or non-controlling interest
  • Spinoffs

SEC Matters

  • Determination of treatment when FASB and SEC disagree