Purchase Price Allocation (PPA) Valuation

Purchase Price Allocation (PPA) Valuation

    For the financial purpose of financial reporting no. 3 (revised 2015) when there is an opportunity to purchase or merge the business. In each event, the overall selling price will most likely be higher than those real estate properties. If that is the case, it means that the executives of the company or organization have a long vision by forecasting and predicting the property and asset value further than the current or existing value that the accounting department must proceed further action in terms of finding the property value by allocating the purchase price and record in the account to be as close to the purchase price as much as possible. Finally, if there are still differences which cannot find assets to be allocated in, this will be recorded as goodwill.

Normally, the business assets that should be brought to adjust to present value (Adjust Book Value) are divided into 2 parts which are:

First: Tangible Assets

1. Real estate that is an establishment and an investment property
2. Machinery, production equipment, and support
3. Raw materials before entering the production process
4. Products in the production process
5. Inventories and products during delivery to the destination
6. Account receivables and cash

Second: Intangible Assets

1. Brand name or Trademark
2. Copyright, patent, and concession card
3. Rights of claim
4. Leasehold rights
5. Agency contract
6. Production formula/secret recipe
7. Technology/Know-How
8. Skill Labor
9. Software license
10. Customer database
11. Goodwill

---