Purchase Price Allocation After explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A resolution plan is approved. The acquirer takes control, and then does something the CIRP never did: it identifies and recognises the intangible assets it has just bought.
Under Ind AS 103, an acquirer must allocate the consideration to the identifiable assets acquired at their fair values — including intangibles the corporate debtor never carried on its balance sheet.
When that exercise surfaces material intangibles the CIRP valuation never mentioned, the creditors were paid for an estate that was described incompletely.
Ind AS 103 makes the acquirer recognise identifiable intangibles at fair value after the acquisition. Where the PPA finds value the CIRP valuation missed, the estate was undervalued and the creditors bore the difference. Running the question in advance — what would a PPA find here? — is a useful discipline before a plan is approved.
What a PPA does
On a business combination, the acquirer allocates the consideration transferred across:
- identifiable tangible assets at fair value;
- identifiable intangible assets at fair value — including ones never recognised by the acquiree, provided they are separable or arise from contractual or legal rights;
- liabilities assumed, including contingent liabilities meeting the recognition criteria;
- goodwill as the residual — or, where the fair value of net assets exceeds the consideration, a bargain purchase.
The intangibles limb is the point. Brands, customer relationships, technology, franchise agreements, order backlogs — assets a company that built them internally could never capitalise — get recognised on acquisition.
Why the gap appears
The CIRP valuation and the PPA are looking at the same company and finding different things, for structural reasons:
Different starting point. The CIRP valuer often works from the balance sheet and the fixed asset register. The PPA works from what the acquirer believes it bought.
Different information. By the time the PPA runs, the acquirer has control, cooperative access, the contracts and the management. The CIRP valuer had none of that. Valuing when records are seized →
Different incentive. Neither is dishonest, but the acquirer has a reason to identify intangibles carefully — amortisation and tax consequences follow from the allocation.
Different asset class treatment. In a CIRP, intangibles sit inside the Securities or Financial Assets class, and a valuer who saw an empty balance sheet may have concluded there was nothing to value. Intangibles under IBC →
Using it as a test before the plan
The useful move is to run the question prospectively, while it can still change the outcome:
Ask what a PPA would identify. Contractual rights, brands, customer relationships, technology, licences — go through the contract file, not the ledger.
Check each against separability. Would this be recognised separately under Ind AS 103, because it is separable or arises from contractual or legal rights? If yes, it should have been in the CIRP valuation.
Test the residual. If the plan value is largely goodwill on a PPA basis, either the intangibles were not identified or the acquirer overpaid. Both are worth understanding before the CoC votes.
Flag it to the CoC. A committee told that the estate contains identifiable intangibles which the valuation did not capture can ask for them to be valued — which is exactly the point at which the omission is still fixable. CoC commercial wisdom →
What it means for liquidation value too
An intangible that a PPA would recognise as separable is, by definition, capable of being sold on its own — which is the same test that decides whether it has liquidation value.
So a PPA-style review does double duty: it tests whether fair value captured the enterprise, and whether liquidation value captured the floor for operational creditors under Section 30(2)(b). Fair value vs liquidation value →
Key takeaways
- Ind AS 103 makes the acquirer recognise intangibles the debtor never capitalised.
- A PPA that surfaces material intangibles the CIRP valuation missed means the estate was undervalued.
- The gap is structural — different starting point, information and incentive.
- Run the question prospectively: what would a PPA find here?
- Work from the contract file, not the ledger.
- Separability is the shared test — it decides PPA recognition and liquidation value alike.
- Flag it to the CoC while it is still fixable.
Read next
- Valuation of Intangible Assets Under IBC
- Securities and Financial Assets Valuation Under IBC
- Fair Value vs Liquidation Value Under IBC
- How the CoC Uses Valuation: Commercial Wisdom and Its Limits
Disclaimer: Positions stated as on 5 September 2026. Accounting treatment under Ind AS 103 is fact-specific — take accounting advice on any particular acquisition.