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Chapter 4 — Initial Measurement

4.4 Contingent Consideration

4.4 Contingent Consideration

ASC 323-10
25-2A If an equity method investment agreement involves a contingent consideration arrangement in which the fair value of the investor’s share of the investee’s net assets exceeds the investor’s initial cost, a liability shall be recognized.
30-2A Contingent consideration shall only be included in the initial measurement of an equity method investment if it is required to be recognized by specific authoritative guidance other than Topic 805.
30-2B A liability recognized under paragraph 323-10-25-2A shall be measured initially at an amount equal to the lesser of the following:
  1. The maximum amount of contingent consideration not otherwise recognized
  2. The excess of the investor’s share of the investee’s net assets over the initial cost measurement (including contingent consideration otherwise recognized).