What is Purchase price allocation (PPA)?

Q: What is Purchase price allocation (PPA)?

Allocating the consideration paid in a business combination to the identifiable assets acquired and liabilities assumed at their fair values, with the remainder determined as goodwill. In a PPA, intangible assets such as brands, customer relationships, technology and order backlog are valued separately. The allocation directly affects post-acquisition amortisation expense and future impairment tests.

In a PPA, intangible assets such as brands, customer relationships, technology and order backlog are valued separately. The allocation directly affects post-acquisition amortisation expense and future impairment tests.

Source: TFRS 3

Related terms

GoodwillThe excess of the consideration paid in a business combination over the fair value of the acquired business's identifiable net assets.Business combinationA transaction or event in which an acquirer obtains control of one or more businesses.Intangible assetsIdentifiable non-monetary assets without physical substance; software, licences, brands and patents are examples.ValuationEstimating the monetary value of a company, share, asset or liability at a specific date and for a specific purpose.Completion accountsFinancial statements prepared as at the closing date of an acquisition, through which the final price is set by net debt and working capital adjustments.Cost of capitalThe minimum rate of return investors expect from an investment in return for the risk they take.

Last updated: October 22, 2026 · This definition is for general information only.