Question
On 1 April 2020 Picant acquired 75% of Sander's equity shares by means of a share exchange and an additional amount payable on 1 April
On 1 April 2020 Picant acquired 75% of Sander's equity shares by means of a share exchange and an additional amount payable on 1 April 2021 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 N$4.2 million but by 31 March 2021 it was clear that the amount to be paid would be only N$2.7 million.
How should Picant account for this N$1.5 million adjustment in its financial statements as at 31 March 2021?
a.
Debit retained earnings/Credit current liabilities b.
Debit goodwill/Credit current liabilities c.
Debit current liabilities/Credit goodwill d.
Debit current liabilities/Credit retained earnings
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