Purchase Accounting Adjustments
When a company purchased a new business or forms a new business, then there is a need to make purchase accounting adjustments for Assets and Liabilities to be shown on the Balance Sheet and update the value to nearest fair value. Usually, such assets include Inventory / Stock , Fixed Assets and Intangible Assets that are required to record at the fair value in the book of new formed company under IFRS. Inventory value will increase due to the purchase price involved in the cost of goods sold. The value of Fixed Assets may increase due the Depreciation charged on these over a period of time. N ew intangible assets require the recognition of Amortization over a period of time in the book of acquirer or purchaser’s company. If the intangible assets’values are not revised, then the acquirer or purchaser needs to record heavy loss due to the larger amount of amortization expense until the intangible assets have been completely amorti...