Financial Reporting Valuation

How BDO can help

Our team possesses technical knowledge and deep experience in providing independent valuations for financial reporting purposes, including fair value financial reporting. 

Some of the areas we advise on include:

  • Purchase price allocation (‘PPA’)
  • Intangible asset valuation
  • Impairment testing and appropriateness of discount rate assessment
  • Share-based payments.

PPA and intangible asset valuation

Our experts have provided PPAs in relation to IFRS 3 and AASB3 accounting for business combination for numerous transactions, including complex, cross-border deals.

Our team’s combined decades of experience with the PPA process means that you will receive the most knowledgeable and efficient valuation advice.

For financial reporting purposes, the purchase consideration relating to a business combination must be fair valued and allocated between separately identifiable intangible assets, tangible assets, liabilities and goodwill as of the transaction date. This process can have a significant impact on reported earnings in future periods, making the PPA an integral part of the M&A process.

BDO is a significant provider of PPAs, compliant with the provisions of AASB3/IFRS3 and US GAAP ASC 805, for both accounting and tax purposes. Our PPAs have always successfully passed reviews from companies’ auditors and the ATO. We offer a unique value proposition when it comes to PPAs including:

  • Partner-led delivery and senior experienced personnel
  • Real commercial acumen enabling an understanding of the issues and stakeholders involved and the importance of providing high quality advice specific to your business
  • Extensive experience in PPAs
  • Embedded firm culture that promotes innovation and creative thinking along with the importance of tailoring solutions appropriate to your business
  • Project based management which ensures that key personnel are always available for your project
  • Competitive rates.

We have assisted a significant number of listed and unlisted Australian and international companies with PPA. Our extensive experience with PPA includes: Expertise in the identification and the fair value measurement of assets acquired including:

  • Customer contracts and customer relationships
  • Technology including software, patents, databases, trade secrets, know-how
  • Contractual assets including licenses and non-compete agreements
  • Trademarks and trade names
  • Inventory
  • Order backlog
  • Deferred revenue
  • Contingent consideration
  • PP&E
  • Proficiency and expertise across a broad range of industries
  • Demonstrated ability in calculating discount rates for specific assets, companies or projects
  • Technical competency to conduct calculations in accordance with the relevant standards.

Impairment testing

Our financial reporting valuation team assist clients with impairment reviews under AASB 136/IAS 36.  Our services range from a fully outsourced impairment review, comprising value in use and/or fair value calculations, through to advice on components of the calculations.

Share-based payments

We help clients estimate the fair value of employee award and incentive grants for financial reporting purposes under IFRS/AASB 2 and ASC 718.   We are highly adept at modelling even the most complex of share schemes, so whether it requires Black-Scholes, binomial lattice or Monte Carlo simulation, we have the tools to assist.

Lease accounting

Pooling of leases sharing similar characteristics and determination of an incremental borrowing rate for each lease pool, in order to comply with IFRS 16/AASB 116, is another area of financial reporting where our valuation expertise can add value.  We analyse factors such as capital structure/credit rating, current secured lending (if any) and loan-to-value ratios, in order to generate a credit ‘spread’ to apply to an underlying interest rate curve and hence an appropriate incremental borrowing rate specific to our client.

Read more about BDO’s lease accounting services.

Contact us

Contact our team to discuss your needs using the request for service form. Alternatively, call us on 1300 138 991 to speak with an adviser in your nearest BDO office.