Consideration transferred
Consideration transferred is what the acquirer gives in exchange for control of a subsidiary, measured at acquisition-date fair value for goodwill calculations. At FA level, this includes cash and shares issued by the parent; deferred and contingent consideration are outside the stated FA calculation scope. Share consideration uses the fair value of the shares issued, not merely their nominal value.
Worked example
A parent pays $80,000 cash and issues 10,000 of its own shares with an acquisition-date market value of $3 each. Consideration is $110,000. If each share has $1 nominal value, $10,000 is share capital and $20,000 share premium for that share issue.
Common mistake
The parent’s investment cost is not added to the subsidiary’s net assets in consolidation: it is eliminated as part of the acquisition calculation.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | FR | Direct | Official assessment-window verification pending |
| ACCA | K1 | Direct | July 2027–August 2028 |
| ACCA | SBR | Direct | Official assessment-window verification pending |
| CIMA | F2 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |
Related terms
Also called: purchase consideration