§ 01 — What It Is
The accounting answer to "what exactly did we buy?"
When one entity acquires another, Ind AS 103 requires the consideration paid to be allocated to the identifiable assets acquired and liabilities assumed — each at fair value on the acquisition date. That means looking past the ledger: customer relationships, brands and trade names, developed technology, order backlogs and non-compete arrangements must each be identified, valued and assigned a useful life. Whatever cannot be attributed to an identifiable asset becomes goodwill.
The allocation is not a formality. It determines the amortisation charge that flows through the P&L for years, the goodwill balance that must be tested for impairment annually, and the day-one picture the board and investors see. And because it lands directly in audited financial statements, the real design constraint is auditor scrutiny — our reports are structured around the questions the audit team and their valuation specialists will ask, before they ask them.
§ 02 — Who Needs It
Common triggers
- A completed acquisition — a business combination has closed and the acquirer reports under Ind AS, so the deal must be accounted for under Ind AS 103.
- The first audit after a deal — statutory auditors ask for a supportable allocation and useful-life analysis before signing off on the post-acquisition financials.
- Group restructuring — mergers, entity consolidations or acquisitions of businesses within a wider group that qualify as business combinations requiring acquisition accounting.
- Investor and board reporting — PE-backed acquirers needing a clean day-one balance sheet and a clear view of future amortisation before the next reporting cycle.
- Deals with heavy intangible content — technology, brand or customer-driven acquisitions where a naive allocation would dump most of the price into goodwill and invite challenge.
§ 03 — Our Approach
Built backwards from the audit review
We follow our standard discipline — Scope → Analyse → Triangulate → Deliver & Defend — applied to the specific mechanics of a PPA:
- Identify — a structured review of the deal rationale, contracts and diligence material to establish which intangibles meet the recognition criteria, so nothing defensible is missed and nothing indefensible is invented.
- Value — recognised methods matched to each asset: multi-period excess earnings for customer relationships, relief-from-royalty for brands and technology, with-and-without for non-competes, and replacement cost where appropriate.
- Reconcile — the internal rate of return on the deal, the weighted average cost of capital and the weighted average return on assets are cross-checked so the allocation hangs together as a whole — the first test any auditor's specialist applies.
- Support — useful lives reasoned from attrition data, contract terms and technology cycles, documented so the amortisation policy survives review.
The report closes with a plain-English value narrative: what was bought, where the price went and what it means for the P&L — written for the board pack, not just the audit file. The signing valuer then stays available through the auditor's review.
§ 04 — FAQ
Questions we hear before every mandate
When is a PPA mandatory?
Whenever an entity reporting under Ind AS acquires control of a business — Ind AS 103 requires acquisition accounting, and that means allocating the consideration to identifiable assets and liabilities at fair value. Asset purchases that do not constitute a business, and common-control transactions, follow different treatment; we confirm which regime applies at scoping.
How long after closing do we have to complete it?
Ind AS 103 allows a measurement period of up to twelve months from the acquisition date to finalise the allocation, with provisional amounts reported in the interim. In practice, your first audit after the deal sets the real deadline — most clients want the PPA finalised before that audit begins rather than relying on provisional figures.
What intangibles typically come out of a PPA?
Customer relationships and contracts are the most common, followed by brands and trade names, developed technology or software, order backlogs and non-compete arrangements. What emerges depends on why the deal was done — a distribution-led acquisition and a technology acquisition produce very different allocations. Whatever remains after identifiable assets are valued is goodwill.
How does the allocation affect our future P&L?
Directly. Identified intangibles are amortised over their useful lives, creating a recurring non-cash charge; goodwill is not amortised but is tested for impairment at least annually. A well-reasoned allocation gives the board a predictable amortisation schedule and a goodwill balance that can be supported in future impairment tests — decisions made now shape reported earnings for years.
What is the timeline and how is the fee structured?
For standard mandates, an indicative allocation within 5–7 business days of receiving the deal documents and financial information, and a full signed report within 10–15. Fees are fixed and scope-bound, quoted after a short scoping call — no hourly meters, and a re-quote before proceeding if the scope genuinely changes.