CERTYNEX IFRS ACADEMY

The analyst at Ormeau SA classified the contingent consideration of a business combination as equity, on the ground that settlement is to be in the acquirer's shares, without further analysis. What is the error?

The classification is correct: settlement in the acquirer's shares gives an equity instrument, without further examination.

The classification must result from applying IAS 32; settlement in shares is not enough to conclude that it is an equity instrument.

The error is to have classified the contingent consideration: it is part of the non-controlling interest.

The error is to have omitted to remeasure it through profit or loss at each reporting date, as a liability would be.