Purchase Price Allocations for Solar Energy Systems for Financial Reporting Purposes
This White Paper was produced by SEIA and CohnReznick
As the solar energy industry continues to evolve, industry participants are increasingly involved in mergers and acquisitions involving solar projects. Some acquired projects are in development, while others are acquired at or following commissioning. These transactions often require purchase price allocations for financial reporting and/or income tax reporting.
A purchase price allocation is a process of allocating the value of the consideration paid and liabilities assumed among the assets purchased. It is important to note that purchase price allocations for financial reporting and income tax purposes are subject to completely different rules and guidance – and will often differ substantially. This paper’s focus is financial reporting, not income tax reporting.
Proper reporting of purchase price allocations for financial reporting purposes is important to record depreciation and amortization of the assets and to establish appropriate basis for future impairment testing. This white paper is intended to provide an overview of best practices in performing purchase price allocations for typical solar energy projects.
Notice: This educational publication is not intended to provide tax, legal or other professional advice. Readers should not rely upon this publication for such reasons and instead seek professional counsel to properly address specific situations. Readers are hereby on notice that CohnReznick and SEIA shall not liable for any reliance upon this educational publication as a substitute for such professional counsel.