--- title: Valuation for Financial Reporting (UAE) | Assetica description: After an acquisition, the valuation work is not over. Purchase price allocation under IFRS 3, annual goodwill impairment testing under IAS 36, and fair… url: https://assetica.net/blog/valuation-financial-reporting-uae/ source: Assetica, independent business valuation firm, Dubai and the UK --- # Valuation for Financial Reporting in the UAE: PPA, Impairment Testing and IFRS 13 By **Bill Anderson**, FCCA, Chief Executive Officer, Assetica — 2026-06-29 ![Valuation for Financial Reporting in the UAE: PPA, Impairment Testing and IFRS 13 — Assetica, independent business valuation, Dubai](https://images.unsplash.com/photo-1554224155-8d04cb21cd6c?auto=format&fit=crop&w=1100&q=65) Direct Answer: After an acquisition, the valuation work is not over. Purchase price allocation under IFRS 3, annual goodwill impairment testing under IAS 36, and fair value measurement under IFRS 13, explained for UAE CFOs and auditors. After an acquisition, the valuation work is not over. Purchase price allocation under IFRS 3, annual goodwill impairment testing under IAS 36, and fair value measurement under IFRS 13, explained for UAE CFOs and auditors. ## Purchase price allocation under IFRS 3 When one business acquires another, IFRS 3 requires the price paid to be allocated across the identifiable assets and liabilities acquired at fair value: tangible assets, and crucially the intangibles such as brands, customer relationships, contracts and technology. Whatever cannot be allocated becomes goodwill. The PPA determines future amortisation and the size of the goodwill balance that must be tested annually, so it is scrutinised closely by auditors and directly affects reported profits for years. ## Goodwill impairment testing under IAS 36 Goodwill is not amortised; it is tested for impairment at least annually. That test is a valuation: the recoverable amount of the cash-generating unit is estimated, usually through a discounted cash flow, and compared to its carrying value. Weak assumptions here are among the most common audit findings in the region. An independent, well-documented impairment model turns an annual audit argument into a routine sign-off. ## Fair value under IFRS 13 and the hierarchy IFRS 13 defines fair value and ranks the evidence behind it: Level 1 quoted prices, Level 2 observable inputs, Level 3 unobservable inputs such as private company DCFs. Most private UAE business interests sit at Level 3, which triggers the heaviest disclosure and audit attention. A financial-reporting valuation must therefore document its inputs and sensitivity analysis to the hierarchy, not just conclude a number. ## Frequently Asked Questions What is a purchase price allocation (PPA)? After an acquisition, IFRS 3 requires the price paid to be allocated at fair value across the identifiable assets and liabilities acquired, including intangibles like brands, customer relationships and technology. The unallocated remainder is goodwill. The PPA drives future amortisation and the goodwill balance tested annually. How often must goodwill be tested for impairment? At least annually under IAS 36, and more often if there are indicators of impairment. The test compares the recoverable amount of the cash-generating unit, usually estimated by discounted cash flow, against its carrying value. Why does my auditor want an independent valuation? Because material fair values must be tested, and a value prepared by the party it benefits carries little evidential weight. An independent valuation documented to IFRS 13 and IVS standards gives the auditor a basis they can rely on and reduces audit friction. ## Related Guides - [Purchase Price Allocation Explained: How Acquisitions Are Valued Under IFRS 3](https://assetica.net/blog/purchase-price-allocation-ifrs-uae/) - [How Intangible Assets and Brands Are Valued: IP, Customer Relationships and Goodwill](https://assetica.net/blog/intangible-asset-brand-valuation-uae/) - [Business Valuation Standards Explained: IVS, RICS Red Book and IFRS 13](https://assetica.net/blog/business-valuation-standards-ivs-rics-ifrs/) ## Independent business valuation across the UAE, UK and Europe ### Valuation services - [Business valuation Dubai](https://assetica.net/services/business-valuation/) - [Golden Visa business valuation](https://assetica.net/golden-visa-valuation/) - [UAE corporate tax valuation](https://assetica.net/corporate-tax-valuation/) - [M&A and transaction valuation](https://assetica.net/ma-transaction-valuation/) - [Financial due diligence](https://assetica.net/financial-due-diligence/) - [Succession planning valuation](https://assetica.net/succession-valuation-uae/) - [Family office valuation](https://assetica.net/family-office-valuation/) - [Feasibility study Dubai](https://assetica.net/feasibility-study-dubai/) - [All advisory services](https://assetica.net/services/) ### Where we work - [Abu Dhabi](https://assetica.net/abu-dhabi-business-valuation/) - [Sharjah](https://assetica.net/sharjah-business-valuation/) - [DIFC](https://assetica.net/difc-business-valuation/) - [ADGM](https://assetica.net/adgm-business-valuation/) - [United Kingdom](https://assetica.net/uk-business-valuation/) - [Europe](https://assetica.net/europe-business-valuation/) - [South Africa](https://assetica.net/south-africa-business-valuation/) - [Australia](https://assetica.net/australia-business-valuation/) ### Resources - [How much is my business worth?](https://assetica.net/how-much-is-my-business-worth-dubai/) - [Free business valuation calculator](https://assetica.net/business-valuation-calculator/) - [UAE valuation facts and figures](https://assetica.net/uae-business-valuation-facts/) - [Valuation insights and guides](https://assetica.net/blog/) - [Latest insights](https://assetica.net/insights/) - [Industries we value](https://assetica.net/industries/) - [For lawyers and accountants](https://assetica.net/for-advisors/) ### About Assetica - [Business valuation Dubai and UAE](https://assetica.net//) - [About Assetica](https://assetica.net/about/) - [Bill Anderson, FCCA, CEO](https://assetica.net/team/bill-anderson/) - [Contact us](https://assetica.net/contact/) ### Browse by topic - [Business valuation articles](https://assetica.net/blog/category/business-valuation/) - [Selling a business](https://assetica.net/blog/category/business-sale/) - [Strategic value advisory](https://assetica.net/blog/category/strategic-advisory/) - [Financial reporting valuation](https://assetica.net/blog/category/financial-valuation/) - [Valuation risk management](https://assetica.net/blog/category/risk-management/) - [Pitch decks and fundraising](https://assetica.net/blog/category/pitch-deck/)