Purchase Price Allocation
Definition
The accounting process required under IFRS 3 and ASC 805 following a business combination, in which the consideration paid is allocated to the fair values of the identifiable assets acquired and liabilities assumed. Identifiable intangible assets — including customer relationships, technology, trademarks, and non-compete agreements — must be recognised separately from goodwill if they are either contractual or separable. PPA is a key deliverable for financial reporting and drives post-acquisition amortisation charges.
Related Terms
Related FAQ
Can you capitalise intangible assets on the balance sheet?
Yes, under IAS 38 and ASC 350, intangible assets can be capitalised when they meet specific recognition criteria — but internally generated goodwill and many R&D costs must be expensed.
Read full answer →What is purchase price allocation (PPA)?
PPA is the process of allocating the total price paid in a business acquisition across the acquired company's identifiable tangible assets, intangible assets, liabilities, and goodwill.
Read full answer →What is the difference between goodwill and intangible assets?
Goodwill is the residual value paid above the fair value of all identifiable net assets in an acquisition. Intangible assets are specific, identifiable non-physical assets like brands, patents, and customer relationships.
Read full answer →Put this knowledge to work
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