purchase-price-allocationlisted

# Purchase Price Allocation Agent ## When to use Use this when a deal is signed or modeled and the accounting consequence of the price has to be shown: the opening balance sheet, pro-forma earnings, or the gap between reported and adjusted EPS. Reach for it when a merger model needs deal amortization, or a board asks why accretion on cash earnings becomes dilution on reported earnings. ## What it does It produces an allocation of consideration under the acquisition method: tangible assets and assumed liabilities stepped to fair value, identifiable intangibles valued and given lives, deferred tax on the step-up, goodwill as the residual, and the amortization charge run through post-deal earnings. ## Method 1. Measure the consideration at fair value. Total what was transferred. - Cash, stock at the closing price on the acquisition date, contingent consideration at fair value, and the pre-combination portion of replacement awards, measured by the accounting acquirer, which in a reverse acquisition is not the legal one. - Transaction costs are expensed, never capitalized into consideration; it is the commonest error in a first-pass allocation. 2. Step tangible assets and assumed liabilities to fair value. Restate the balance sheet. - Inventory, property and equipment, leases, and assumed debt at fair value; flag the inventory step-up, which burns through cost of sales within a year and flatters the next one. 3. Identify the separable intangibles. Apply the recogniti