If cash payments to investors are dependent on one or more future events, the instrument in question would be considered equity.

Question

Quizplus · Accepted Answer

Cash payments to investors that are dependent on one or more future events typically describe contingent consideration, which can be part of a financial instrument but does not solely qualify the instrument as equity. Equity classification depends on ownership rights and other factors, not just the contingency of payments.

If Cash Payments to Investors Are Dependent on One or More