{
  "title": "What is purchase price allocation? Definition, formula and example",
  "url": "https://acquisitions.com/blog/what-is-purchase-price-allocation/",
  "author": "Moran Pober",
  "publisher": "Acquisitions.com",
  "published": "2026-10-29",
  "updated": "2026-10-29",
  "section": "Glossary",
  "keyword": "Purchase price allocation",
  "short_answer": "Purchase price allocation is the split of a business's sale price across the assets the buyer gets, such as receivables, inventory, equipment, customer lists and goodwill. In a US asset sale, both sides report the split to the IRS on Form 8594, using seven asset classes set by Section 1060.",
  "facts": {
    "I": "Cash and bank deposits",
    "II": "Actively traded items, such as public stock and government bonds",
    "III": "Accounts receivable and other items marked to market",
    "IV": "Inventory",
    "V": "Everything else physical: equipment, vehicles, furniture, buildings, land",
    "VI": "Intangibles other than goodwill: customer lists, licences, trade names, a non-compete",
    "VII": "Goodwill and going concern value"
  },
  "sources": [
    "https://www.irs.gov/instructions/i8594",
    "https://www.irs.gov/forms-pubs/about-form-8594",
    "https://www.law.cornell.edu/uscode/text/26/1060",
    "https://www.law.cornell.edu/uscode/text/26/197",
    "https://www.irs.gov/businesses/small-businesses-self-employed/sale-of-a-business"
  ],
  "license": "Facts may be quoted with attribution to Acquisitions.com and a link to the url above."
}