On 1 April 20X0 Picant acquired 75% of Sander's equity shares by means of a share exchange
Question:
On 1 April 20X0 Picant acquired 75% of Sander's equity shares by means of a share exchange and an additional amount payable on 1 April 20X1 that was contingent upon the post-acquisition performance of Sander. At the date of acquisition Picant assessed the fair value of this contingent consideration at GHS4.2 million but by 31 March 20X1 it was clear that the amount to be paid would be only GHS2.7 million. How should Picant account for this GHS1.5 million adjustment in its financial statements as at 31 March 20X1?
A Debit current liabilities/Credit goodwill
B Debit retained earnings/Credit current liabilities
C Debit goodwill/Credit current liabilities
D Debit current liabilities/Credit retained earnings
Financial Accounting and Reporting
ISBN: 978-1292162409
18th edition
Authors: Barry Elliott, Jamie Elliott