The draft of the new version of the IDW S 1 standard and its impact on the valuation practice

Brands are among the most valuable assets of many companies. The value of the Apple brand alone exceeded the trillion-dollar mark in 2024, highlighting the significance of intangible asset valuation in business valuations and purchase price allocation. Various methods play a role here, including the relief-from-royalty method. The relief-from-royalty method provides a structured approach to valuing intangible assets, enhancing transparency in accounting. We will outline the basic concept, explain the necessary steps for implementation, and assess its suitability for application under IFRS and tax law.

Purchase price allocation is a cornerstone of any company acquisition within a corporate group. Its ramifications extend deeply into both accounting and future financial reporting. In valuation practices, meticulous and standard-compliant implementation of purchase price allocation is paramount. This ensures accurate representation of acquired assets and mitigates potential risks in subsequent valuations. This article delves into all pivotal aspects of purchase price allocation during initial consolidation following a company acquisition. It underscores the requirements of IFRS and German GAAP for purchase price allocation and elucidates the distinctions in their application. Additionally, it offers practical guidance for implementation.