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A contingent consideration arrangement provides an additional payment subject to a maximum cap, but the cap can be revised upwards by mutual consent. For Ind AS 103 disclosure purposes:
ADefer disclosure until cash settlement
BDisclose only the lower-bound estimate
CDisclose the undiscounted range of outcomes; if the maximum is effectively unlimited, disclose that fact
DDisclose only the cap as the maximum
Answer & Solution
Correct answer: C. Disclose the undiscounted range of outcomes; if the maximum is effectively unlimited, disclose that fact
Paragraph 59(g)(iii) requires disclosure of the range of outcomes (undiscounted), or if a range cannot be estimated, the reason. If maximum is unlimited, this must be stated. A revisable cap effectively makes the maximum 'unlimited' for disclosure purposes.
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