Fair Value Allocation
Assigning Fair Values
At acquisition, all identifiable assets acquired and liabilities assumed are measured at fair value. Differences between book value and fair value create future depreciation, amortization, or inventory adjustments in consolidation.
- Inventory adjustments
- Property, plant, and equipment revaluation
- Intangible assets recognition
- Liability fair value adjustments
Note
Internally generated goodwill of the acquired company is not recognized separately.
Summary
Fair value allocation ensures the acquired company's assets and liabilities are reflected at current economic values.