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Hi Mike,
I am having some difficulties regards to how do we determine whether the deferred consideration is current liabilities or non current liabilities?
We should look at the date of sofp until the date of payment OR date of acquisition until the date of payment?
example 1 , date of acquisition (DOA) is 1 january 2015
date of sofp is 31 december 2015
date of payment is 31 december 2016
it is considered as current liabilities or non current liabilities?Example 2, date of acquisition (DOA) is 1 january 2015
date of sofp is 31 december 2015
date of payment is 1 january 2017
it is considered as current liabilities or non current liabilities?“We should look at the date of sofp until the date of payment OR date of acquisition until the date of payment?”
We’re not likely going to be preparing a set of financial statements as at the date of acquisition so it’s an academic question
The determination of current / deferred liabilities arises on the occasion of the preparation of the financial statements so we need to look at the date of the financial year end and the date of potential payment of the deferred consideration and compare with the 12 month current / deferred line
“example 1 , date of acquisition (DOA) is 1 january 2015
date of sofp is 31 december 2015
date of payment is 31 december 2016
it is considered as current liabilities or non current liabilities?”Current – it’s within 12 months of the financial year end (just!)
“Example 2, date of acquisition (DOA) is 1 january 2015
date of sofp is 31 december 2015
date of payment is 1 january 2017
it is considered as current liabilities or non current liabilities?”Non-current – it’s more than 12 months after the financial year end (just!)
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