Contingent Consideration Should Be Valued At

question 38

Multiple Choice

Contingent consideration should be valued at:

• A) the fair value of the consideration on the date of acquisition.
• B) the book value of the consideration at the date of acquisition.
• C) the acquirer's pro-rata share of the subsidiary's net assets at book value at the date of acquisition.
• D) the acquirer's pro-rata share of the subsidiary's net assets at fair value at the date of acquisition.

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Definitions:

Stockholders' Equity

The remaining value of a company's assets after all debts are paid off, which reflects the shareholders' stake in the corporation.

Assets

Resources owned or controlled by a company that are expected to produce future economic benefits.

Net Income

The remaining profit of a company after expenses and taxes are taken out of its revenue.

Accrued Expense

Costs that have been incurred for goods or services but have not yet been paid for or recorded in the financial statements.