IFRS 3

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January 19, 2019 at 1:05 pm #502680
gangsta1
Member
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The purchase consideration of an acquisition will include any ‘Contingent Payments’ payable in more that 12 months from the acquisition date and this will be discounted to present value.

What happens if the contingent payment is within 12 months from the acquisition date? How is this accounted for sir?
January 21, 2019 at 8:45 pm #502930
P2-D2
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Hi,

It would be accounted for in the same manner, but in reality it is unlikely to happen. The reason for this is that the contingent payment is likely to be based on the profitability of the subsidiary and we wouldn’t know this for at least twelve months.

Thanks
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