Purchase price allocation
1. Pre-Transaction Preparation
2. Identifying Acquired Assets and Liabilities
3. Valuation of Assets and Liabilities
- Gather relevant data on physical assets.
- Use appropriate valuation methods (e.g., cost, market).
- Ensure compliance with accounting standards.
- Document all assumptions and calculations.
- Identify all intangible assets (e.g., patents, trademarks).
- Apply valuation techniques (e.g., income approach).
- Assess market conditions and competitive factors.
- Document rationale for valuations.
- Identify all liabilities being assumed.
- Evaluate potential risks and obligations.
- Use appropriate discount rates for present value calculations.
- Document the process and findings.
- Detail each valuation method applied.
- Include rationale for choosing specific methods.
- Ensure clarity and transparency in documentation.
- Maintain records for audit and review purposes.
- Research market trends and economic indicators.
- Identify comparable transactions in the industry.
- Analyze pricing and valuation metrics.
- Incorporate findings into valuation assessments.
- Identify indicators of potential impairment.
- Conduct a qualitative assessment first.
- If needed, perform quantitative impairment tests.
- Document results and conclusions.
- Gather recent appraisal reports.
- Compare previous valuations to new data.
- Adjust valuations as necessary.
- Document changes and justifications.
- Create a detailed reconciliation schedule.
- Ensure all asset and liability valuations are included.
- Highlight any discrepancies and their reasons.
- Document the reconciliation process.
- Identify all potential contingent liabilities.
- Evaluate likelihood and potential financial impact.
- Use appropriate methods to estimate fair value.
- Document findings and rationale.
- Identify relevant legal and regulatory requirements.
- Assess their impact on asset valuations.
- Consider any restrictions or obligations imposed.
- Document implications for valuations.
- Identify qualified valuation experts.
- Engage them early in the valuation process.
- Discuss methodologies and compliance standards.
- Document collaboration efforts and outcomes.
- Analyze historical financial statements.
- Assess trends and performance metrics.
- Incorporate forecasts into valuation assessments.
- Document insights and their impact on valuations.
- Evaluate the appropriateness of various methods.
- Select methods based on asset type and context.
- Document rationale for chosen approaches.
- Ensure consistency in application.
- Identify tax implications related to valuations.
- Consider deferred tax assets and liabilities.
- Evaluate the impact of tax laws on valuations.
- Document all tax-related considerations.
Use in Manifestly