A new issue of the Financial Reporting Valuation Flash has been released and is available in the Insights section of this website.
This issue contains the article “Contingent Consideration on the Rise.” Quoting from the article:
As more transactions involve some type of contingent consideration, it has become increasingly important for companies to identify and understand the valuation implications of this liability.
ASC 805, the section of the FASB codification that addresses business combinations, requires that:
“The fair value of contingent consideration be recognized and measured at fair value at the acquisition date. In most cases, recognition of a liability for contingent
consideration will increase the amount of goodwill recognized in the transaction.”
The contingent consideration liability must be re-measured at each subsequent reporting date until resolution of the contingency, and any increases or decreases in fair value will show up on the income statement as an operating loss or gain.
To download this issue (pdf), click here.
Brought to you by the Financial Reporting Group of Mercer Capital, the Financial Reporting Valuation Flash is a complimentary email newsletter featuring need-to-know news, useful how-to’s, as well as articles of interest for CFOs, Treasurers, Controllers, and other finance professionals.
To view past issues of the Financial Reporting Valuation Flash, vist the Insights section of this website.