Which of the following is false regarding contingent consideration in business combinations?
A) Contingent consideration payable in cash is reported under liabilities.
B) Contingent consideration payable in stock shares is reported under stockholders' equity.
C) Contingent consideration is recorded because of its substantial probability of eventual payment.
D) The contingent consideration fair value is recognized as part of the acquisition regardless of whether eventual payment is based on future performance of the target firm or future stock price of the acquirer.
E) Contingent consideration is reflected in the acquirer's balance sheet at the present value of the potential expected future payment.

Question

Quizplus · Accepted Answer

Contingent consideration is recorded at fair value at the acquisition date, not because of its substantial probability of eventual payment.

Which of the Following Is False Regarding Contingent Consideration in Business