Purchase Price Allocations And Goodwill Impairment Testing

Purchase Price Allocations

When purchasing a business in an asset deal, the consideration is often expressed as a lump sum. However, a purchaser would need to know how much of the purchase price is allocated to each asset in order to calculate the appropriate tax depreciation and amortization deduction. The seller is also interested in the purchase price allocation to determine the gain or loss on such assets. Moreover, the buyer and the seller must each disclose such allocation on their respective tax returns for the year in which the transaction occurred. With extensive extensive experience in valuing intangible assets such as brand, trademarks, licenses, customer and supplier relationships, non-compete agreements and goodwill, Valuracion is well poised to provide you with accurate calculations for assignment of goodwill, acquired assets and liabilities to reporting units.

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).

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 VIU and FVLCD of CGUs.