CERTYNEX IFRS ACADEMY

In a business combination, the acquirer undertakes to pay additional consideration if the acquiree meets an activity target. How does it classify this obligation to pay contingent consideration?

As a liability, since the amount depends on uncertain future events, which prevails over the classification criteria.

As an equity instrument when settlement is made in the acquirer's shares, whatever the number of shares delivered.

As a liability or as an equity instrument, in accordance with IAS 32.

At the acquirer's choice, without reference to another standard, to reflect management's intention about settlement.