The consideration paid in the case of a business combination can take many forms, including, but not limited, cash, shares, notes, conditional payments, income, etc. Regardless of the form or date of the consideration, it must be accounted for at fair value on the date of acquisition. Examples: The preparation of an AAE usually begins with a revision of the acquisition model of the purchaser. The internal return (IRR) of the acquisition is then calculated by terminating the rate that equates the net value of the cash flow of the acquired business to the purchase price. The acquisition of IRR represents the weighted average return of all assets and liabilities of the acquired transaction. The acquisition error is then compared to a weighted average cost of capital, calculated independently, to determine whether the consideration constitutes fair value. Market approach As part of the market approach, the fair value of an asset reflects the price at which comparable assets are acquired in similar circumstances. When the market approach is applied, data are collected on prices paid for reasonably comparable assets. A Purchase Price Accounting (AAE) is the process of awarding consideration in a business acquisition („business combination“) to acquired and acquired assets (including intangible assets). It includes a balance sheet one for the purchaser, in which the various assets/liabilities acquired by the target company are indicated. The PPA process analyzes individual assets and business processes in a detailed process that is often not studied. A clear understanding of the main operational drivers of the objective is fundamental to this analysis.

Once the acquired intangible assets have been identified and the acquisition error has been identified, the next step is to assess identifiable intangible assets. There are three generally accepted approaches to assessing intangible assets: common intangible assets acquired through business combinations include: the acquisition account must be applied to any acquisition of a business that is defined as a „business combination.“ Acquisition accounting is generally complex and requires considerable skills, experience and effort to ensure robust and satisfactory results. In addition, the requirements of three important accounting standards must be considered together, as they are interdependent: AASB 3: business combinations; AASB 136: asset impairment; and AASB 138: intangible assets. Similar requirements apply for tax purposes when an acquisition falls under the tax consolidation regime.