An accurate valuation is the foundation for GAAP or IFRS reporting, including the determination of the Fair Value of intangible assets and tangible assets, and associated leases and liabilities. The process allows the identification of intangible assets, including intellectual property and customer related assets and assigns Fair Value to those assets, which can then be amortized over their useful life for GAAP reporting.
As it is in the transfer of ownership of a company, the IRS (IRC 1060) requires a purchase price allocation statement (Form 8594) to be submitted by both the buyer and seller. This can be negotiated, within reason, and the statements must match. Frequently, an ASC 805 allocation is used to satisfy the requirements of Form 8594.
