Taking a closer look at financial statement adjustments

Description

Abstract: Often, an appraiser needs to make adjustments to get a clearer picture of an investment’s future economic benefits and to determine an objective value for the subject interest. This article uses a hypothetical divorce case to illustrate the fact that taking financial statements at face value can be misleading and inaccurate. The article points out that an appraiser may need to make adjustments to the financial statements to account for a particular business’s situation and circumstances, including the business interest size and the valuation purpose.