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Valuation Services: Post-CECL Fair Value (Exit Price) Disclosures & Day 1 Valuations

Financial institutions reporting business combinations (ASC 805/820) or for institutions seeking assistance for fair value/”exit price” disclosure purposes (ASU 2016-01) may experience confusion, frustration, and time constraints. While there is a long-standing tradition in the industry of using the exit price notion under a business combination scenario, many entities still use entry price or adjusted entry price for disclosure purposes, but it is not a compliant approach. These compliance issues will become more apparent with the introduction of analogous CECL calculations. Mercifully, these analogous CECL calculations not only present the compliance issues, but they also provide a straightforward framework for fixing them.