An obligation of an acquirer to pay contingent consideration to the former owners of an acquired entity in a business combination can be recognized as which of the following?

A Liability An Equity Item

a. Yes Yes

b. Yes No

c. No Yes

d. No No

Question

Andres Petersen

Business

20 September, 00:40

An obligation of an acquirer to pay contingent consideration to the former owners of an acquired entity in a business combination can be recognized as which of the following?

A Liability An Equity Item

a. Yes Yes

b. Yes No

c. No Yes

d. No No

+3

Answers (1)

Know the Answer?

Macdonald · Answer 1

option A (Yes Yes) is correct.

Explanation:

An obligation to pay contingent consideration in a business combination may be recognized by the acquirer as either a liability or as an equity item, depending on the nature of the obligation under the provisions of FASB #150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity."

An obligation of an acquirer to pay contingent consideration to the former owners of an acquired entity in a business combination can be recognized as which of the following?A Liability An Equity Itema. Yes Yesb. Yes Noc. No Yesd. No No

An obligation of an acquirer to pay contingent consideration to the former owners of an acquired entity in a business combination can be recognized as which of the following?

A Liability An Equity Item

a. Yes Yes

b. Yes No

c. No Yes

d. No No