The short answer
- Under SFRS(I) 3 or FRS 103, the buyer measures identifiable assets and liabilities at fair value at the acquisition date.
- Intangibles such as customer relationships, brands and technology are recognised separately from goodwill.
- Goodwill is the residual. It is not amortised under SFRS(I); it is tested for impairment every year.
- You have up to 12 months from the acquisition date to finalise the allocation.
The steps
- Confirm the acquisition date and the consideration, including any earn-out at fair value.
- Identify the assets acquired, including intangibles not on the seller's books.
- Value each one, usually with income-based methods for intangibles.
- Recognise deferred tax on the fair value adjustments.
- Goodwill is what remains. A bargain purchase gain needs a second look.
Intangibles that commonly appear
| Intangible | Typical method |
|---|---|
| Customer relationships | Multi-period excess earnings |
| Brand and trade names | Relief from royalty |
| Technology and software | Relief from royalty or replacement cost |
| Order backlog | Excess earnings over a short life |
| Non-compete agreements | With and without method |
What auditors test
- Completeness of intangibles identified
- Consistency of forecasts with the deal model
- Discount rates and the reconciliation of returns
- Useful lives and the goodwill residual
A worked example
A Singapore company buys 100% of a software business for S$10 million. The seller's balance sheet shows net assets of S$3 million at fair value. The valuation identifies customer relationships worth S$2.5 million and a brand worth S$1 million. Deferred tax at 17% on those S$3.5 million of intangibles is S$0.595 million.
| Item | S$ million |
|---|---|
| Consideration | 10.000 |
| Net assets acquired at fair value | (3.000) |
| Customer relationships | (2.500) |
| Brand | (1.000) |
| Deferred tax liability on intangibles | 0.595 |
| Goodwill | 4.095 |
The intangibles are amortised over their useful lives, which reduces profit for years. Goodwill is not amortised under SFRS(I) but is tested for impairment every year. The split therefore matters for every future set of accounts, not just the first.
The accounting standards allow up to a year from the acquisition date to finalise provisional amounts. Use it, but do not rely on it: auditors expect a well-supported allocation at the first year end.
Questions people ask
How long do you have to finalise a purchase price allocation?
Up to 12 months from the acquisition date.
Is goodwill amortised?
No. It is tested for impairment every year.
Talk it through with an adviser
Tell us your structure and deadlines. We reply with what applies to you and a fixed-fee proposal.
Sources
- Corporate Professionals: Valuation under the Income-tax Rules, 2026 (secondary source)
General information only, last reviewed 11 November 2026. It is not advice for your situation. Laws and practice change, and the official sources linked above prevail. Speak to a qualified adviser before you act.
