5.9 Liabilities Incurred as Consideration
ASC 805-30-30-7 states that the consideration transferred includes “liabilities incurred by the acquirer
to former owners of the acquiree.” For example, liabilities incurred include contingent consideration and
seller notes or loans to the acquirer. They do not include the acquiree’s preexisting liabilities payable to
third parties that may be assumed by the acquirer in a business combination or settled on behalf of the
acquiree or its seller at the closing of the acquisition.
See Section 4.12
for more information about accounting for an acquiree’s debt in a business
combination. In addition, the acquirer may incur new debt with a third party to fund
the acquisition, which also is not part of the consideration transferred.