PPA (Purchase Price Allocation ou Alocação do Preço de Compra e avaliação de ativos intangíveis)

 

What

Purchase Price Allocation distributes the consideration paid for a company among the assets acquired and liabilities assumed, including intangible assets, such as: Brand, Client Relationship, Contracts, Technology, Patents among other.

 

This study has to be performed for transaction accounting for auditing purposes, according to Brazilian (defined by Comitê de Pronunciamentos Contábeis - CPC) and international (defined by Financial Accounting Standards Board - FASB, for USA, and International Accounting Standards Board - IASB for other countries) accounting standards.

 

When

In a context of acquisition, when it is necessary to account for the transaction for reporting, auditing or strategic purposes. 

 

How

It is a complex study that can be separated in 4 main phases:

1.Business Enterprise Valuation - BEV);

2.Identification and valuation of intangible assets;

3.Calculation of Fair Value of other assets acquired and liabilities assumed; and

4.Calculation of goodwill, deferred taxes and reconciliations (WARA, IRR, ROA, ROIC).

 

Techniques, approach, methodologies and assumptions are very specific and must be updated, further demanding accounting knowledge and  a complex general reconciliation of the study.

The main underlying assumption of this study is that calculations must be based on fair values of different assets and liabilities, and considering a scenario of a typical buyer, called market participant.

 

Format

This report must be presented according to the requisites and needs of auditors, based on international and Brazilian accounting standards. Usually, this service has a format of an extensive report, comprising the 4 phases of the study, including techniques, approaches, methodology and assumptions used.