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Behandl. Thorax.ing
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Glossary entry

Norwegian term or phrase:

merverdi

English translation:

excess (of purchase price/cost) over book value

Added to glossary by brigidm
May 24, 2010 17:09
13 yrs ago
9 viewers *
Norwegian term

merverdi

Norwegian to English Bus/Financial Accounting
"merverdi ved kjøp av virksomheter er allokert til identifieserbare eiendeler og gjeldsposter op oppkjøpstidspunktet. Merverdi som ikke er allokert til eiendeler og gjeldsposter klassifieseres som goodwill i balansen."

I have seen this term translated in similar contexts with "surplus/excess/added value" but I'm still not convinced that - in this context - this is correct. The reason why is that in relevant IAS contexts, the term "fair value" is used. For example:

"In an acquisition, therefore, the acquiring company must be identified. Usually, that is evident. If it is not evident, IAS 22.11 provides some guidance:

The fair value of one of the combining enterprises is significantly more than that of the other. " IAS 22.

"Under the allowed alternative treatment, the assets and liabilities should be measured at their fair values as at the date of acquisition with the minority's interest being stated at its proportion of the fair value of the assets and liabilities. "[IAS 22.34]

Are we not talking about the same thing here? Would appreciate settling this recurring issue once and for all ;-)
Proposed translations (English)
5 excess (of purchase price/cost) over book value
5 -1 sales tax or value added tax
4 -1 added value

Discussion

brigidm (asker) May 25, 2010:
No, David, you're not being a pain at all. That was an error on my part, which I realised post-publication. Hence my subsequent attempts to clarify this for future reference. We need all the spanners we can get, as long as they're constructive and help others avoid making errors ;-)
David Siebert May 25, 2010:
"fair value" Far be it for me to throw any spanners in the works here, but translating merverdi as fair value would seem a bit odd. The standard translation for fair value is virkelig verdi - which is a fair way from merverdi. Sorry if I am being a pain.
Christopher Schröder May 25, 2010:
Beauty is in the eye of the beholder, Per :-) Just giving some options as there is no single correct answer. Excess value is not a set term in English and without some kind of explanation it is a bit meaningless (begs the question: excess of what over what?). It's a bit like "laveste verdi prinsipp" - in English we have to spell out what this means: "lower of cost and net realisable value".
brigidm (asker) May 25, 2010:
For future reference: From (IFRS 3 Business Combinations) :
"This IFRS ..requires goodwill acquired in a business combination to be recognised by the acquirer as an asset from the acquisition date, initially measured as the excess of the cost of the business combination over the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities recognised in accordance with (d) above."

"requires the acquirer to reassess the identification and measurement of the acquiree’s identifiable assets, liabilities and contingent liabilities and the measurement of the cost of the business combination if the acquirer’s interest in the net fair value of the items recognised in accordance with (d) above exceeds the cost of the combination. Any excess remaining after that reassessment must be recognised by the acquirer immediately in profit or loss." (IFRS 3 Business Combinations).

Conclusion: "excess", "excess value" or "excess (value) over fair value" all seem to be standard terms.
Vedis Bjørndal May 24, 2010:
Fair value =virkelig verdi, NHH. I wondered what the exact translation for this is.
Per Bergvall May 24, 2010:
If added value doesn't work - Your best bet seems to be excess value.
Dawn Nixon May 24, 2010:
About merverdi in Einar Hansen 'Bedre engelsk forretningsspråk' : Merverdi = excess value, dvs. verdi av eiendeler utover bokført verdi (=value of assets in excess of book value). Hope it helps!
Per Bergvall May 24, 2010:
Excess value is probably good too - But the question was what would be a good Englisg translation when the source term was merverdi. I am sure there is a more complex Norwegian term that would have been used if excess value was the intended meaning.
Vedis Bjørndal May 24, 2010:
Excess value I think this would be ok in your context.
brigidm (asker) May 24, 2010:
"excess over/of fair value"? I think this is it: "the amount of any excess of the fair value of the acquiree's identifiable net assets over the cost of acquisition, and the line item in the income statement in which the excess is recognised."
"a description of the factors that contributed to a cost of acquisition that results in the recognition of goodwill, or a description of the nature of any excess of the fair value of the acquiree's identifiable net assets over the cost of acquisition " (http://www.iasplus.com/agenda/buscomb.htm )

Proposed translations

1 day 2 hrs
Selected

excess (of purchase price/cost) over book value

See reference for explanation. First assets' book values are written up to fair value, and what's left of the purchase price is recognised as goodwill.
Reference:

http://en.wikipedia.org/wiki/Purchase_price_allocation

Something went wrong...
4 KudoZ points awarded for this answer. Comment: "Thanks, Chris"
-1
6 mins

added value

I don't think there is a reason for this to be a recurring issue. Merverdi is added value - it's really as simple as that. Merverdiavgift is value added tax, and I do believe you even have an official abbreviation for it.
Peer comment(s):
disagree Christopher Schröder : Value added is more of an economic than an accounting concept (and paying more than assets are worth on paper is not adding value to them) - this can be a very tricky word to translate - if only we did have a simple equivalent!!
2 hrs
So your choice is the simple, but beautiful "excess (of purchase price (or cost)) over fair value (of net assets acquired)"?
neutral Vedis Bjørndal : Bjørn Haneide: merverdi: Økningen av verdien av et produkt etter hver som foredlingsprosessen skrider frem. Merverdiavgift (MVA): Avgift til staten. Mv av en bedr. (ideell verdi) utover de mat.eiend min.gjelden
3 hrs
Something went wrong...
-1
1 day 52 mins

sales tax or value added tax

In the US this would be better explained as a sales tax, which, like merverdi avgift, is a percentage of the SALE PRICE. Like merverdi avgift, there are some exceptions to the tax, such as price for food, or certain necessities.

In England, I'm pretty sure this is a VALUE ADDED TAX as Per Bergvall says in his comment
Note from asker:
As already mentioned, apalix, the term in this context has nothing to do with VAT. It has to do with the accounting treatment of acquisitions.
Peer comment(s):
disagree Christopher Schröder : This is an accounting thing, not a tax thing :-)
1 hr
Got you. In the US we might call that a service charge, even though it has nothing to do with a service. Banks and institutions do it. It may have to do with a product or a service.
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