How will the additional future considerations (shares) account for in financial statements? In 2X19, A...
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Accounting
How will the additional future considerations (shares) account for in financial statements?
In 2X19, A company had purchased a subsidiary and agreed to pay additional future consideration for the purchase (the consideration would take the form of additional shares). The additional consideration was a function of the profitability of the subsidiary. The more profitable the subsidiary, the more shares that the company would issue as consideration. Given that the company's shares are highly volatile, the company and the new subsidiary agreed that the number of shares to be issued should be based on the average price per share in the three months prior to the future issuance date of the shares. So far, the subsidiary has been performing above expectations.
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