What is a purchase price allocation?
In an effort to bring consistency and transparency to business combinations, the Financial Accounting Standards Board (FASB) set forth very specific rules governing how these transactions must be accounted for under Statement No. 141R (FAS 141). It mandated that the total purchase price be allocated among all major assets and liabilities in proportion to their fair value, a purchase price allocation, and that a universal method of accounting be utilized to do this − called “the acquisition method”. AccuVal helps acquirers ensure the allocation of purchase price meets regulatory approval by providing independent appraisals that meet the stringent review of auditors and the SEC. How are purchase price allocations performed? First, AccuVal’s team seeks to understand the circumstances surrounding the acquisition to confirm that the event is, in fact, required to abide by FASB pronouncements. The target company, acquirer, acquisition date, book value and purchase price are identified, and r
