Acquisition accounting
Where a transaction falls within AASB 3, valuation work may support the measurement of acquired assets and liabilities. The accounting assessment should establish the transaction's treatment and the required measurements.
Valuation service
Financial reporting valuations
Financial reporting valuations need to answer a defined accounting question at the correct measurement date. Finance teams and their advisers need clear methods, traceable assumptions and analysis that can be reviewed. Begin with the reporting requirement, assets or interests involved and the information the financial statement preparer and auditor expect to consider.
When it is useful
Decisions this valuation can support
Impairment analysis
Valuation inputs can support a recoverable-amount assessment under AASB 136. The relevant asset or cash-generating unit, forecasts and assumptions need to be defined before modelling begins.
Fair value measurements
For items requiring fair value, the analysis should reflect the relevant measurement requirements. AASB 13 provides a framework for fair value measurement; it does not itself require every asset to be carried at fair value.
Evidence and methods
How the value is assessed
Methods may include market comparisons, discounted cash flows or asset-specific techniques. Fair value and value in use have different requirements and should not be treated as interchangeable labels. For impairment, recoverable amount is the higher of value in use and fair value less costs of disposal. The applicable framework guides the model and its inputs.
Read about our valuation approach and Calvin Lim’s experience.
Information we may need
- The accounting issue, applicable reporting period and measurement date
- Relevant accounting policies and the proposed scope discussed with your advisers
- Transaction documents or asset schedules, where applicable
- Approved budgets, forecasts and supporting operational assumptions
- Prior valuation models, impairment papers and carrying amounts
- Available market evidence and auditor information requests
What the work can deliver
Depending on the scope, the output can include a report, valuation schedules, key assumptions, sensitivity analysis and supporting explanations for review. Agree whether responses to auditor questions and subsequent model updates are included. The valuation supports the reporting process; it does not constitute an audit opinion.
Scope, fees and timing
The number of assets or reporting units, forecast readiness, complexity of the models and review timetable affect effort. Early agreement on the accounting question and expected review material can reduce late changes. Allow for information requests and discussion of material assumptions.
Related support
Explore connected valuation services
Real-property valuation, tax advice and legal advice require appropriately qualified advisers. Any reliance on other specialists is agreed within the engagement scope.
Practical questions
Frequently asked questions
Can a transaction valuation simply be used in the accounts?
Not necessarily. A negotiated transaction analysis may have a different purpose, scope or basis from the measurement required for financial reporting. The financial statement preparer should identify the accounting requirement before reuse is considered.
Will this guarantee auditor acceptance?
No. Auditors make their own assessments and may ask questions or require further evidence. The engagement should anticipate the review process and clearly identify responsibilities for accounting judgements and source information.
Who decides the accounting treatment?
Management and its accounting advisers remain responsible for preparing the financial statements. The valuation scope should specify the measurement assistance requested and the assumptions or accounting conclusions supplied by them.
Discuss the purpose of your valuation
Tell us the interest involved, the intended use and any deadline. We can then discuss scope and the information needed.