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4 January, 01:53

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

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Answers (1)
  1. 4 January, 02:31
    0
    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."
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