Which of the following statements regarding contingent liabilities subsequent to the initial accounting for a business combination is FALSE?
A)Having recognized any contingent liabilities of the acquiree as liabilities, the acquirer must then determine a subsequent measurement for the liability.
B)The liability is initially recognized at fair value.
C)Subsequent to acquisition date, the liability is measured as the amount initially recognized less, if appropriate, cumulative amortization recognized.
D)The liability would be measured at the best estimate of the expenditure required to settle the present obligation at the end of the reporting period.

Question

Quizplus · Accepted Answer

Subsequent measurement of contingent liabilities after their initial recognition in a business combination does not involve amortization. Instead, these liabilities are measured at the best estimate of the expenditure required to settle the present obligation at the reporting date or at their initially recognized amount adjusted for changes in the amount or timing of the expected outflows.

Which of the Following Statements Regarding Contingent Liabilities Subsequent to the Initial