Purchase Price Allocation Services – XoraH PLLC

Purchase price Allocation Services

Accurate and defensible purchase price allocation under ASC 805. Our CPA advisors identify and measure acquired intangible assets, liabilities assumed, and goodwill for business combinations of all sizes.

Intro to Services

A purchase price allocation is one of the most consequential accounting exercises that follows a business acquisition. How the purchase price is allocated across acquired assets and liabilities determines the amortization charges, impairment testing obligations, and goodwill that will appear on your balance sheet for years to come. An inaccurate or incomplete PPA creates downstream reporting problems, audit risk, and potential restatements.

Our purchase price allocation services provide the technical accounting expertise to get this right the first time. We work with acquirers across the middle and lower middle market to prepare PPAs that are accurate, well-documented, and defensible under audit.

What is purchase price allocation?

Under ASC 805, when one entity acquires another in a business combination, the acquirer must allocate the total consideration transferred to the identifiable assets acquired and liabilities assumed — each measured at fair value as of the acquisition date. The excess of the consideration over the net fair value of identifiable assets and liabilities is recognized as goodwill.

The allocation requires identification of intangible assets that may not have been recognized on the target\’s balance sheet — including customer relationships, trade names, proprietary technology, non-compete agreements, and order backlogs. These intangibles are recognized at fair value and subsequently amortized over their estimated useful lives, affecting reported earnings for years after the acquisition.

Our Purchase price allocation process

Step 1 – Transaction Review and Scoping

We begin by reviewing the purchase agreement, financial statements of the acquired business, and any available valuation or due diligence reports. This allows us to scope the PPA, identify all asset classes requiring fair value measurement, and establish a project plan aligned with your audit timeline.

step 2 – identification of acquired assets and liabilities

We identify all tangible and intangible assets acquired and liabilities assumed in the transaction — including those not recognized on the target\’s pre-acquisition balance sheet. We apply the ASC 805 recognition criteria to determine which intangibles must be separately identified and valued.

step 3 – fair value measurement coordination

Intangible asset valuation requires fair value techniques under ASC 820 — typically the income approach (multi-period excess earnings method or relief-from-royalty method) for identified intangibles. We work alongside your valuation specialist or independently coordinate the valuation process, reviewing inputs and conclusions for reasonableness and GAAP compliance.

step 4 – goodwill calculation

We calculate residual goodwill as the excess of consideration transferred over the fair value of net identifiable assets acquired. We also advise on goodwill allocation to reporting units for purposes of annual impairment testing under ASC 350.

step 5 – PPA documentation and audit support

We prepare a comprehensive PPA memorandum that documents the methodology, assumptions, and conclusions underlying the allocation. This memo is designed to support auditor review and provide a clear audit trail for the purchase accounting judgments made at the acquisition date.

intangible assets commonly identified in a pPA

• Customer relationships and customer lists
• Trade names and trademarks
• Developed technology and proprietary software
• Non-compete agreements
• Order backlog and in-process revenue contracts
• Favorable lease agreements
• Licensing agreements and permits