Have
you recently purchased a second business? Did you know that a merger
& acquisition initiates additional tax requirements? One of the
most important requirements is Purchase Price Allocation (PPA). PPA
is the method of allocating a purchase price over the acquired assets
and liabilities. To clarify this in a better way, read the below
information.
When
it comes to purchasing a business, the buyers want to acquire the
assets of that business and not buy the actual business entity
because the entity could have hidden liabilities. For example, if the
previous business owner made a mistake on tax returns, that mistakes
could bring thousands of unexpected tax liabilities and penalties,
which the new owner would not want to incur.
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One
of the most important steps, that generally miss by both business
buyers and sellers, is the allocation of purchase price to assets. To
deal with this situation, hiring a professional consultant for
purchase
price allocation services could be a smart decision.
Today,
there are a number of consultants that provide PPA services and
assist companies with their due diligence and announced processes.
They provide a purchase price allocation in accordance with
Accounting Standard Codification 805, Business Combinations, and FASB
ASC 820. Be it tangible equipment, fixed assets, financial
instruments, real estate, or intangible assets, they have the
expertise to value all considerations.
So,
if you are in a situation where you need assistance with your due
diligence, get purchase price allocation services by a
professional consultant to avoid various tax-related complications
and ensure that the purchase price allocation is done in an accurate
manner.
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