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I have read in Kaplan that purchase consideration, includes:
1. Cash Consideration
2. Shares Exchange/ Issues
3. Deferred Consideration
4. Asset Consideration
5. Share Scheme IssuanceKindly, explain the treatment of Share Scheme Issuance part.
ThanksThe term is unclear if that’s what they have written. My best guess is:
If Company A buys Company B, part of the consideration may be providing a share based pay scheme to the employees of Company B (to replace another scheme).
I’ve copied the below from iasplus.com: (if you are interested).
“Contingent payments to employees and shareholders
…
Where share-based payment arrangements of the acquiree exist and are replaced, the value of such awards must be apportioned between pre-combination and post-combination service and accounted for accordingly. [IFRS 3.B56-B62B] ”
As always………….keep it simple in this exam! 🙂
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