Intangible Asset Valuation

Goodwill & Purchase Price Allocation

valuation_goodwill_ppa

Read-onlyIdempotent

Calculate goodwill as the residual and allocate purchase price to identified intangibles; estimate useful lives for ASC 805 / IFRS 3 business combinations.

Instructions

Goodwill and purchase price allocation: goodwill as the residual, a full PPA waterfall across identified intangibles, and useful-life estimation. Method selects the formula. Use for ASC 805 / IFRS 3 business combinations; purchase_price_allocation allocates consideration to identified intangibles with the remainder to goodwill. For subsequent goodwill and intangible impairment testing use valuation_impairment; for individual intangible fair values feed valuation_ip, valuation_technology or valuation_customer into the allocation. Per method: goodwill needs purchase_price + fair_value_net_identifiable_assets; purchase_price_allocation needs purchase_price + tangible_assets_fv + identified_intangibles (optional: liabilities_fv); useful_life needs asset_type (optional: legal_life, economic_factors, obsolescence_rate). identified_intangibles values are summed before goodwill is taken as the residual; liabilities_fv reduces net identifiable assets. Only method is required; other parameters are method-dependent, so supply those named for the selected method and omit the rest (documented defaults apply where defined). Pure arithmetic: no I/O and no external calls, and numeric results are returned rounded to 2 decimals. Parameters belonging to other methods of this tool are accepted and ignored. Supplying an unknown method, or leaving unset a parameter that the chosen method requires, returns an error instead of a value.

Input Schema

TableJSON Schema

Name	Required	Description
`method`	Yes	Formula to apply. Options: goodwill = Goodwill = purchase price - fair value of net identifiable assets.; purchase_price_allocation = Allocate consideration across identified intangibles.; useful_life = Estimate economic/legal useful life of an intangible.
`asset_type`	No	Asset type, e.g. "patent", "trademark", "software", "customer_list".
`legal_life`	No	Legal protection period in years (overrides the asset-type default).
`liabilities_fv`	No	Fair value of assumed liabilities, in currency units.
`purchase_price`	No	Total consideration / purchase price, in currency units.
`economic_factors`	No	Economic adjustment factors, e.g. {"market_growth": 0.05, "competition": 0.4, "tech_change": 0.1}.
`obsolescence_rate`	No	Annual obsolescence rate as a decimal.
`tangible_assets_fv`	No	Fair value of tangible assets, in currency units.
`identified_intangibles`	No	Identified intangibles, each {name, value} or {name, fair_value}.
`fair_value_net_identifiable_assets`	No	Fair value of net identifiable assets, in currency units.

Output Schema

TableJSON Schema

Name	Required	Description
`error`	No	Error message when the call fails.
`steps`	No	Intermediate calculation steps for traceability (one string per step).
`value`	Yes	Computed valuation, rate, or metric.
`method`	No	Formula / method name that produced the result.
`assumptions`	No	Modelling assumptions applied (list of strings or key/value object).
`formula_reference`	No	Mathematical formula or reference applied.

Schema Changelog

Changes observed during successful MCP inspections.

Changed2 schema fields changedv0.1.4Sep 30, 2026

changedOutput schema / properties / steps / description

Previous value: -"Intermediate calculation steps for traceability."New value: +"Intermediate calculation steps for traceability (one string per step)."

removedOutput schema / properties / steps / items / type
```
Removed value: -"object"
```

First observedv0.1.0Sep 30, 2026

TDQS

A4.8/5.0

Behavior5/5

Does the description disclose side effects, auth requirements, rate limits, or destructive behavior?

Annotations already declare readOnly/idempotent/non-destructive, and the description adds substantial behavioral context beyond them: pure arithmetic with no I/O or external calls, results rounded to 2 decimals, method-specific parameters for other methods accepted and ignored, and an explicit error contract for unknown methods or missing required params.

Agents need to know what a tool does to the world before calling it. Descriptions should go beyond structured annotations to explain consequences.

Conciseness4/5

Is the description appropriately sized, front-loaded, and free of redundancy?

Front-loaded with purpose, then per-method requirements, then the error/no-I/O contract. It is long, but for a 10-parameter multi-method tool nearly every sentence carries routing or contract information; the opening clause mildly restates the title.

Shorter descriptions cost fewer tokens and are easier for agents to parse. Every sentence should earn its place.

Completeness5/5

Given the tool's complexity, does the description cover enough for an agent to succeed on first attempt?

With an output schema present the description need not explain returns, and it still covers method selection, required/optional params per method, residual arithmetic, defaults, error behavior, and sibling routing – everything an agent needs to invoke this correctly.

Complex tools with many parameters or behaviors need more documentation. Simple tools need less. This dimension scales expectations accordingly.

Parameters4/5

Does the description clarify parameter syntax, constraints, interactions, or defaults beyond what the schema provides?

Schema coverage is 100%, so baseline is 3, but the description adds real semantics beyond the schema: which params each method requires, that identified_intangibles values are summed before goodwill is taken as residual, and that liabilities_fv reduces net identifiable assets. Only the operational detail of the economic_factors/obsolescence_rate inputs is left thin.

Input schemas describe structure but not intent. Descriptions should explain non-obvious parameter relationships and valid value ranges.

Purpose5/5

Does the description clearly state what the tool does and how it differs from similar tools?

States a specific verb+resource (goodwill as residual, PPA waterfall, useful-life estimation) and explicitly distinguishes itself from valuation_impairment for downstream impairment testing. An agent can route between siblings without opening any schema.

Agents choose between tools based on descriptions. A clear purpose with a specific verb and resource helps agents select the right tool.

Usage Guidelines5/5

Does the description explain when to use this tool, when not to, or what alternatives exist?

Gives explicit when-to-use (ASC 805 / IFRS 3 business combinations), names the alternative for impairment (valuation_impairment), and routes feeding tools (valuation_ip/technology/customer) into the allocation. Nothing is left to inference.

Agents often have multiple tools that could apply. Explicit usage guidance like "use X instead of Y when Z" prevents misuse.

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