Identify and recognise acquired intangible assets that qualify separately from goodwill under IFRS 3.
Finance & Banking
Purchase Price Allocation and Goodwill Impairment Testing Under IFRS 3 and IAS 36
Learn to allocate purchase price under IFRS 3, value acquired intangibles, recognise goodwill and deferred tax, and run IAS 36 impairment tests with defensible value-in-use models.
🗓️Duration5 training days
📚Content4 modules · 8 sessions
🎓On completionAccredited attendance certificate
About the programme
Course Overview
Every acquisition creates a reporting obligation that many finance teams underestimate: IFRS 3 requires the purchase price to be allocated across identifiable assets and liabilities at fair value within a measurement period, and the resulting goodwill must then be tested for impairment under IAS 36 for as long as it remains on the balance sheet. This course works through both halves of that obligation. Participants identify and value acquired intangible assets such as customer relationships, brand and technology using the multi-period excess earnings, relief-from-royalty, cost and market approaches, then calculate residual goodwill and the deferred tax that fair value uplifts create. The impairment half builds a value-in-use model with a cash-generating-unit-specific discount rate, tests headroom sensitivity to growth and margin assumptions, and works through the mechanics of allocating an impairment loss when a unit fails its test. Exercises use realistic acquisition data sets and valuation templates rather than abstract formulas, leaving participants able to run a purchase price allocation from consideration to opening balance sheet and defend a goodwill impairment conclusion to auditors.
Expected Learning Outcomes
Value acquired intangibles using the multi-period excess earnings, relief-from-royalty, cost and market approaches.
Calculate residual goodwill and the deferred tax arising from fair value adjustments on acquired assets.
Allocate goodwill to cash-generating units and document the basis for that allocation.
Build a value-in-use model with a cash-generating-unit-specific discount rate and terminal value.
Run sensitivity analysis on impairment testing assumptions to assess the robustness of recoverable amount headroom.
Prepare IAS 36 impairment disclosures covering key assumptions, sensitivity and recoverable amounts.
Who Should Attend
Financial reporting managers responsible for post-acquisition purchase price allocation.
Corporate development and M&A finance teams supporting completed transactions.
Valuation specialists engaged to value intangible assets in business combinations.
External and internal auditors reviewing goodwill and intangible asset balances.
Group finance directors overseeing goodwill impairment testing across multiple acquisitions.
Technical accounting teams preparing IFRS 3 and IAS 36 disclosures for annual reports.
Course Modules
Select any module to see its sessions and points.
01Purchase Price Allocation Fundamentals under IFRS 3
2 sessions · 8 points
Session 1Identifying and Recognising Acquired Intangible Assets
- Identify separately identifiable intangible assets, such as customer relationships and brand, that qualify for recognition under IFRS 3.
- Distinguish assets recognised only in a business combination from those that would not qualify outside an acquisition.
- Assess non-compete agreements and order backlogs for recognition as identifiable intangible assets.
- Apply the recognition criteria that separate goodwill from identifiable assets and assumed liabilities.
Session 2Measuring Consideration Transferred and Contingent Consideration
- Measure the consideration transferred, including cash, equity instruments and deferred payments, at acquisition date fair value.
- Value contingent consideration arrangements and classify them as a liability or equity under IFRS 3.
- Remeasure contingent consideration liabilities at each reporting date and account for the resulting gain or loss.
- Reconcile working capital adjustments and completion accounts mechanisms into the final consideration figure.
02Valuing Acquired Assets
2 sessions · 8 points
Session 1Income Approach: Multi-Period Excess Earnings and Relief-from-Royalty
- Apply the multi-period excess earnings method to value customer relationships based on projected cash flows.
- Use the relief-from-royalty method to value acquired trademarks and brand names.
- Select an appropriate royalty rate and discount rate by benchmarking comparable licensing transactions.
- Cross-check income approach valuations against the overall purchase price and weighted average cost of capital.
Session 2Cost and Market Approaches and Useful Life Determination
- Apply cost and market approaches to value acquired software, equipment and other tangible-like intangibles.
- Determine the useful life of each acquired intangible asset based on contractual, legal and economic factors.
- Build an amortisation schedule for acquired intangibles consistent with their determined useful lives.
- Reconcile valuation conclusions across the income, cost and market approaches for internal consistency.
03Goodwill Recognition and CGU Allocation
2 sessions · 8 points
Session 1Calculating Goodwill and Deferred Tax on Fair Value Adjustments
- Calculate residual goodwill as the excess of consideration transferred over identifiable net assets acquired.
- Recognise deferred tax liabilities arising from fair value uplifts on acquired intangible assets.
- Adjust the goodwill calculation for measurement period adjustments identified within twelve months of acquisition.
- Distinguish bargain purchase gains from goodwill and apply the reassessment procedures IFRS 3 requires.
Session 2Allocating Goodwill to Cash-Generating Units
- Allocate goodwill to cash-generating units or groups of units expected to benefit from the acquired business.
- Document the basis for CGU allocation, including how management monitors goodwill for internal reporting.
- Reassess CGU allocation following a subsequent reorganisation of the acquired business.
- Track goodwill balances by CGU across a portfolio of historical acquisitions for group reporting.
04Goodwill Impairment Testing Under IAS 36
2 sessions · 8 points
Session 1Building Value-in-Use Models and Discount Rates
- Build a value-in-use model projecting five years of cash flows plus a terminal value for each cash-generating unit.
- Derive a discount rate from the weighted average cost of capital adjusted for cash-generating unit specific risk.
- Test the internal consistency of cash flow projections against board-approved budgets and external market data.
- Calculate the recoverable amount as the higher of value in use and fair value less costs of disposal.
Session 2Impairment Triggers, Sensitivity and Disclosure
- Identify impairment indicators, such as adverse market conditions or loss of a major customer, that trigger testing.
- Run sensitivity analysis on discount rate, growth rate and margin assumptions to test headroom robustness.
- Allocate an impairment loss first to goodwill and then pro rata to other assets within the cash-generating unit.
- Prepare IAS 36 disclosures covering key assumptions, sensitivity and the recoverable amount of each unit.
What the participant receives
4 course modules
A structured syllabus
8 training sessions
across 5 days
32 detailed points
Applied, detailed content
Accredited attendance certificate
On completing the programme
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