Purchase Price
Allocation

Comprehensive Purchase Price Allocation Solutions

Under IFRS and GAAP, once a merger or acquisition is completed, the total purchase consideration must be allocated to the acquired assets and assumed liabilities through the Purchase Price Allocation (PPA) process.

PPA plays a critical role in financial reporting by ensuring transparency and compliance with applicable accounting standards. It involves identifying and valuing tangible and intangible assets, liabilities, and goodwill, enabling businesses to present an accurate financial position while reducing the risk of errors that may impact taxation or regulatory compliance.

At RBK Valuation, we deliver reliable and well-structured PPA services tailored to the needs of Indian businesses. Our valuation professionals perform detailed assessments to determine the fair value of assets and liabilities and support seamless post-acquisition financial integration.

Whether the objective is valuing identifiable intangible assets or managing tax and reporting implications of M&A transactions, we provide end-to-end PPA support with precision and confidence.

Why Purchase Price Allocation Matters

Purchase Price Allocation is a critical post-acquisition exercise that ensures regulatory compliance, financial transparency, and informed decision-making.

  • Ensures adherence to IFRS and GAAP by accurately measuring acquired assets and assumed liabilities at fair value.

  • Enhances clarity and credibility in financial reporting, strengthening confidence among investors and stakeholders.

  • Enables effective tax planning through correct identification and classification of assets and liabilities.

  • Provides reliable valuation insights that support informed strategic and financial decisions.

  • Reduces the risk of misstatements and compliance issues that may result in regulatory scrutiny or investor concerns.

Purchase Price Allocation (PPA) Valuation Process

Our structured and methodical PPA valuation process ensures precise asset recognition
and compliance with applicable financial reporting standards.

1

Identification of Assets and Liabilities

Identify all acquired tangible and intangible assets and assumed liabilities.

2

Fair Value Measurement

Measure assets and liabilities using cost, market, and income approaches.

3

Purchase Price Allocation

Allocate the transaction price to assets and liabilities based on fair value.

4

Goodwill Assessment

Calculate goodwill as the excess over identifiable net assets.

5

Deferred Tax Recognition

Recognize deferred tax impacts from book and tax value differences.

6

Finalization and Reporting

Finalize allocation and prepare financial reporting documentation.

Different PPA Valuation Methods

Income Based Approach

This method estimates an asset’s value by projecting future economic benefits and converting them into today’s value through appropriate discounting.

Valuation Formula: Present Value = Projected Cash Flows ÷ Discount Factor

Market-Based Approach

Asset value is derived by benchmarking against comparable assets that have been recently bought or sold in the open market.

Valuation Formula: Adjusted Value = Comparable Transaction Price × (1 − Market Adjustment)

Cost Based Approach

This approach assesses value based on the current cost required to recreate or replace the asset, factoring in physical wear, functional inefficiencies, and obsolescence.

Valuation Formula: Adjusted Value = Replacement Cost × (1 − Depreciation or Obsolescence Factor)

FAQs

At My Valuation, we use industry-proven valuation methods to assign fair values to acquired assets and liabilities. Our expert analysis ensures compliance with IFRS and GAAP while optimizing tax considerations for your business.

We bring extensive experience in purchase price allocation with a team of certified valuation experts. Our comprehensive approach ensures accuracy, compliance, and strategic insights that benefit your business in the long term.

Incorrect PPA can lead to financial misstatements, regulatory penalties, tax issues, and potential restatements of financial records. It can also affect future amortization expenses and goodwill impairment testing, creating long-term compliance challenges.

Goodwill is calculated as the residual amount after allocating the purchase price to all identifiable tangible and intangible assets and liabilities at fair value. It represents the premium paid for factors like brand reputation, customer relationships, and synergies.

Yes, PPA significantly impacts taxes. The allocation affects the amortization and depreciation deductions available to the acquiring company. Proper allocation can optimize tax benefits by identifying assets with favorable tax treatment and shorter depreciation periods.