Purchase Price Allocation
Businesses grow organically and inorganically. Acquisitions of companies or of specified assets or undertaking have become an accepted means of getting into the next growth phase for companies. For those selling these undertakings, the reasons could be many – realizing value for investments made, decreasing debt, reorganizing business to dispose non-core assets and units etc.
While acquiring any business you may consider acquiring a particular company, group of assets or undertaking for a variety of reasons – the capitalized value of assets and its future potential, the business generated from those assets or the value that could be realized from the business, assets, products, services and team by integrating the same into the company of the acquirer.
But while all the assets and liabilities acquired are presented into books of accounts present accounting and regulatory guidance state that businesses or undertakings that are acquired may be recognized in the books of the acquirer at cost or at fair value.
We may help you in determining the fair value of assets and liabilities to be allocated to each individual asset class for your financial reporting purpose.