Which of the Following Is False Regarding Contingent Consideration in Business

question 92

Multiple Choice

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.

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Definitions:

Industry-Average Learning Curve

A benchmark learning curve that represents the average rate at which companies within a specific industry improve their efficiency or productivity over time as they gain experience.

Competitor

An entity or individual that is in the same industry or market and vies for the same customers or resources.

Learning Curves

Graphs that demonstrate the rate at which people learn a new skill or the performance improvement of an algorithm over time.

Budgets

Financial plans that estimate revenue and expenses over a specified period.