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How to calculate deferred when the buying party enter in agreement to pay for part of shares after two years of acquisition.
Example.
Party agree to pay for 18m shares at the cost of 2.42 after two years. The cost of capital is 10%.You have mentioned that it would not be asked at F7, however it is the part of the first question of June 2008 paper.
@MikeLittle
The issue Wardak asked is about deferred consideration, not deferred tax, coz in the Q, note (vi) is Ignore deferred tax.
@Wardak
The way to calculation you asked is that (18,000*$2.42)/ (1+10%)^2. (rate=10% and year=2).
Hope this help
Normally, in the Q will give us the value of (1+10%)^2=1.21.
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