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Goodwill and PPA

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Simon Mak edited this page Aug 11, 2026 · 1 revision

Goodwill & Purchase Price Allocation

Goodwill calculation and PPA waterfall — Chapter 10. Implemented in intangible_valuation.advanced.goodwill and purchase_price_alloc.

Goodwill (Residual Method)

Formula per ASC 805-30-30-1: Goodwill = Purchase Price - FV of Net Identifiable Assets

from intangible_valuation.advanced.goodwill import goodwill
result = goodwill(purchase_price=10_000_000, fair_value_net_identifiable_assets=7_000_000)
# Goodwill: $3,000,000

PPA Waterfall

Full allocation of purchase price to tangible assets, identified intangibles, liabilities, with residual to goodwill.

from intangible_valuation.advanced.purchase_price_alloc import purchase_price_allocation
result = purchase_price_allocation(
    purchase_price=10_000_000,
    tangible_assets_fv=3_000_000,
    identified_intangibles=[
        {"name": "Patents", "value": 2_500_000, "method": "RFR"},
        {"name": "Customer List", "value": 1_800_000, "method": "MPEEM"},
    ],
    liabilities_fv=500_000,
)

Bargain Purchase

When FV of net assets exceeds purchase price — recognized as a gain.

from intangible_valuation.advanced.purchase_price_alloc import bargain_purchase_analysis
result = bargain_purchase_analysis(purchase_price=5_000_000, net_assets_fv=7_000_000)
# Gain: $2,000,000

Regulatory Framework

  • ASC 805-30-30-1: Goodwill = Consideration - Net Identifiable Assets
  • IFRS 3.32: Bargain purchase → immediate gain recognition
  • ASC 350-20: Goodwill not amortized, tested for impairment annually

MCP Tools

goodwill, purchase_price_allocation

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