Purchase Price Allocation ("PPA") is a multidimensional exercise where in the acquisition price paid by the acquirer to the acquiree (for transactions where there is a change in control) is allocated to the net assets of the latter to determine the resultant goodwill/capital reserve.

Ind AS 103 "Business Combination"requires the acquiring entities to recognize and measure in its financial statements, the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree and the goodwill acquired in the business combination or a gain on account of bargain purchase. The measurement principle of the standard states that the acquirer shall measure the identifiable assets acquired and the liabilities assumed at their acquisition-date fair values. Financial reporting standards across the globe be it US GAAP or IFRS, also mandate similar requirements.

The most significant part of any PPA exercise is the identification and valuation of intangibles acquired in a business combination. We at Credence Consultants are very well positioned in terms of delivering on a PPA exercise as we have been a part of numerous such engagements in the past.