Fresh start accounting allows companies emerging from bankruptcy to present their assets, liabilities, and equity as a “new entity.” AICPA Statement of Position 90-7 (SOP 90-7) requires the company’s balance sheet to be restated at fair value. The reorganization and allocation of the entity value must also conform with the procedures specified by ASC 805.
Companies that undergo fresh start accounting are those that have balance sheet insolvency as determined by ASC 852. If the value of a company’s liabilities is greater than the value of its assets before emerging, then the company requires fresh start accounting. Valuation experts review the balance sheet and value the company’s emergence, system capabilities, and income tax.
- Re-starting a company that is post-bankrupt
Scalar has collaborated with hundreds of clients and performed over 7,000 valuations for varying purposes. With this depth of experience in all areas of valuation, Scalar provides the necessary experience and services to ensure companies comply with fresh start accounting principles.