Business Combinations

SECTION A Gamma Co acquired 80% of Delta Co on 1 January 20X2. At the acquisition date, Delta Co had an unrecorded contingent liability with a fair value of $150,000. By 31 December 20X2, the fair value of this contingent liability had increased to $180,000, though it still did not meet the criteria for recognition as a provision in Delta Co's individual financial statements. How should this contingent liability be treated in the consolidated financial statements of Gamma Group for the year ended 31 December 20X2?

SECTION A Which of the following statements regarding the calculation of Non-Controlling Interest (NCI) at the acquisition date is correct under IFRS 3 Business Combinations?

**Section A** When acquiring SubCo, ParentCo agreed to pay an additional $1 million to the former owners if SubCo's profits exceed a certain target in the first year. At the acquisition date, the fair value of this contingent consideration was estimated at $600,000 and recorded as a liability. At the year-end, SubCo performed exceptionally well, and it is now certain the $1 million will be paid. How should the $400,000 increase in the liability be recorded?