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Hello Chris.
Why do we need to record deferred consideration in the CSOFP?
It’s money owed by the subsidiary to the parent. Shouldn’t it be cancelled upon consolidation?Thanks.
Hi,
We have an obligation to make the payment at a later date and so it must be recorded at its present value in the accounts.
It is not money owed by the subsidiary to the parent, but money owed by the parent to the former shareholders of the subsidiary and so is due outside of the group and therefore is still recognised in the group accounts.
Hope that clears it up.
Thanks
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