Purchase Price Allocation (PPA) Process to Value Assets in an Acquisition

Recently we had a client reach out to us for help with a revaluation of their fixed assets. They were acquired by another company and needed to go through a Purchase Price Allocation (PPA) process. This meant that they had to establish a second database to reset all depreciation and book values while retaining the original database for historical reporting.

The Purchase Price Allocation process starts with current balance sheet value. The company being acquired then typically hires an appraisal company to determine fair market value based on an appraisal of assets and liabilities. The excess amount of the purchase price over fair market value is considered goodwill acquired through the transaction. Here is a sample chart:

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In order to accomplish this, we worked with their IT department to establish a second instance of our software and a brand new database. At that point a backup of the original data could be applied to the new database. The original is then left alone for historical reporting and the new one can be updated with new dates and book value to reflect the revaluation.

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More information about Bassets eDepreciation software can be found at Bassets.net or depre123.com. At Bassets register for our live webinar, download a free evaluation copy and get a personalized pricing estimate. At depre123 try out our Free Depreciation Calculator and check out our cloud based fixed assets application.