NBAA CPA Final Practice Questions - NBAA Certified Public Accountant (CPA) Final Level Exam

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Under IFRS 3 (Business Combinations), how should an acquirer account for contingent consideration in a business combination at the acquisition date?

It should be recognized only when the contingency is resolved and payment becomes certain. It should be recognized at fair value as part of the consideration transferred in the business combination. It should be disclosed in the notes as a contingent liability and not recognized in the financial statements. It should be capitalized as a separate intangible asset apart from goodwill.

Correct Answer:

It should be recognized at fair value as part of the consideration transferred in the business combination.

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