Purchase Price Allocations And Goodwill Impairment Testing

Purchase Price Allocations

In asset deals, the purchase price is always a consolidated lump sum. Allocating this sum to each asset is crucial for tax calculations, financial reporting and determining gains or losses from the acquisitions. Valuracion specializes in providing precise fair market values for acquired intangible assets like brands, trademarks, licenses, goodwill, etc.

Valuracion provides the following services:

Providing support for the qualitative assessment as part of the goodwill impairment test and as part of the impairment test for indefinite-lived intangible assets.
Measurement of the fair value of indefinite-lived assets and other assets within the scope of IAS 36 that generate cash flows that are largely independent from those of other assets.
Measurement of the fair value of indefinite-lived intangible assets, including IPR&D.
Measurement of the Value in Use (VIU) and Fair Value Less Costs to Dispose (FVLCD) of Cash Generating Units (CGUs).

Goodwill Impairment Testing

Valuracion provides impairment testing services for indefinite-lived and amortizable intangible assets in accordance with IAS 36 and IAS 38. IAS 36 requires the testing of goodwill, indefinite-lived intangible assets and long-lived assets within its scope when indicators of impairment exist, or at least on an annual basis for goodwill and indefinite-lived intangibles.

Goodwill is tested at a cash generating unit (CGU) level and is a single step test comparing the carrying value of the CGU to its recoverable amount, which is the higher of Value in Use (VIU) or Fair Value Less Costs of Disposal (FVLCD).