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    • Home
    • Commercial Appr.
      • Commercial RE Appraisal
      • Estate Gift Tax Value
      • Captial Assets Appraisal
      • Hotel Resort Valuation
      • Winery Valuation
    • Cost Seg, Reserve Study
      • Cost Segregation Study
      • Reserve Study HOA
      • CS for Renewable Energy
    • Business Value
      • Business Valuation
      • IP Patent Valuation
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      • Startup, 409a Valuation
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    • Replace Cost, BI, FEMA
      • Replacement Cost Appraise
      • Business Interruption App
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      • Umpire Insurance Appr
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  • Home
  • Commercial Appr.
    • Commercial RE Appraisal
    • Estate Gift Tax Value
    • Captial Assets Appraisal
    • Hotel Resort Valuation
    • Winery Valuation
  • Cost Seg, Reserve Study
    • Cost Segregation Study
    • Reserve Study HOA
    • CS for Renewable Energy
  • Business Value
    • Business Valuation
    • IP Patent Valuation
    • M&A Valuation
    • Startup, 409a Valuation
    • Impairment Valuation
    • ESOP Valuation
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    • ASC 805 PPA Real Property
    • CRT & Donation Value
  • Replace Cost, BI, FEMA
    • Replacement Cost Appraise
    • Business Interruption App
    • 50% FEMA Appr.
    • Umpire Insurance Appr
  • Finan. Forensics
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    • Personal Injury, WD, WT
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Commercial Business
Valuation

Commercial Business ValuationCommercial Business ValuationCommercial Business Valuation

ASC 805 PURCHASE PRICE ALLOCATION - BUSINESS COMBINATIONS

 Purchase Price Allocation is the process of allocating the Purchase Price Paid for Acquired Company to its Tangible Assets, Intangible Assets, and Assumed Liabilities.  

Combinations

 

Tangible Assets 

Real Property: Land, Land Improvements, Buildings, Leasehold Interests 

Personal Property and Related Assets: Machinery and equipment, Furniture and fixtures,  Computer equipment, Vehicles, Construction in progress,  Leasehold improvements


Intangible Assets:   Trademarks, Patented and unpatented technology, Internal-use software, Customer relationships,  Favorable supply agreements, Noncompete agreements, Licensing agreements  

Liabilities: Deferred revenue, Contingent considerations, Contingent liabilities

Tax Implications

 

 Purchase price allocations performed for US tax purposes are done under the standard of fair market value, which is similar to fair value, but which also may differ in certain cases. IRS Section 1060 and Regulation under IRC Section 338 further identify the following seven classes of assets for tax purposes:  


Class 1 Cash  

Class 2 Marketable Securities  

Class 3 Market-to-Market Assets and Accounts Receivable  

Class 4 Inventory  

Class 5 Assets not Otherwise Classified  C

lass 6 Section 197 (intangible) Assets other than 

Class 7 Assets  Class 7 Goodwill and Residual Going Concern Value   


These classifications are extremely important if a company is contemplating a like-kind exchange, a tax-free exchange of stock, or other corporate tax planning transactions.

Purpose of Purchase Price Allocation

 

 Financial Reporting: ASC 805, Formerly SFAS 141r and 142

 •It accurately reflect Components of a Company's Worth 

•Most Intangible Assets are Amortized over their expected lives; This Expense can have a major impact on reported earnings

Valuation Process - Summary

 

 •Determine purchase price and total asset base 

•Identify components of total asset base including tangible assets, intangible assets, and remainder as goodwill 

•Allocate Value to Company's Asset Components - Ultimately to the Intangible Asset Valuation

Identification of Intangible Assets

 

•Identification is dictated by Industry 

•Trademarks/names •Customer contracts & relationships 

•Technology 

•Workforce 

•Patents 

•Databases such as customer mailing lists 

•Non-compete agreements 

•In-process Research and Development ("IPRD") 

•Goodwill


Classifications into Categories: 

•Intangible Assets Separable from Goodwill 

•Intangible Assets Not Separable from Goodwill


Copyright © 2017 Alpha Consulting Group, Certified M&A Advisor (CM&AA), Commercial Business Valuation, Cost Segregation Study, Reserve Study - All Rights Reserved. Business Financial Commercial Valuation, Commercial Real Estate Appraisal, Capital Assets Valuation - Washington State Certified General Real Estate Appraiser, David Hahn, WA Designated Real Estate Broker, Company Business Valuation, Fairness Opinion, Solvency Opinion, Estate Tax Valuation, Gift Tax Valuation, ESOP Valuation, Patent Valuation, IP Valuation, - All Rights Reserved.  David Hahn, Certified Valuation Analyst (CVA), Certified Commercial Investment Member (CCIM), Master Analyst in Financial Forensics (MAFF), Accredited Senior Appraiser (ASA).



  • Commercial RE Appraisal
  • Estate Gift Tax Value
  • Captial Assets Appraisal
  • Hotel Resort Valuation
  • Winery Valuation
  • Cost Segregation Study
  • Reserve Study HOA
  • Business Valuation
  • IP Patent Valuation
  • M&A Valuation
  • Startup, 409a Valuation
  • Impairment Valuation
  • ESOP Valuation
  • ASC 805 Business Comb
  • ASC 805 PPA Real Property
  • CRT & Donation Value
  • Replacement Cost Appraise
  • Business Interruption App
  • 50% FEMA Appr.
  • Umpire Insurance Appr
  • Economic Damages
  • Personal Injury, WD, WT
  • Bankruptcy Valuation
  • Divorce-Valuations
  • Real Estate Damages
  • QUALIFICATIONS
  • Contact Us