Fair valuation of fixed assets for PPA in compliance with IFRS 3

Client

Large pharmaceutical company

Objective

To determine the fair value of the movable and immovable assets of a recently acquired competitor for PPA (purchase price allocation) in compliance with IFRS 3 - Business Combinations.

Approach

Swiss Appraisal applied International Valuation Standards during the valuation. The acquired company's fair value was determined through appraisal of its total assets, and in consideration of the impairment test.

The fair value of the real estate was calculated using sales data in a comparative approach, whilst a cost approach was used to calculate the fair value of auxiliary buildings and structures (pipelines, telephone cables, etc.). In the assessment of moveable property a depreciation replacement cost method was applied.

Results

Swiss Appraisal delivered a clear, concise, and accurate valuation of the acquired business, in compliance with international regulations that was detailed in our Valuation Report. The results were successfully used by our client for the purposes of preparing their consolidated financial statements in accordance with IFRS 3.



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