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An acquirer's obligation to pay contingent consideration is classified as EQUITY under Ind AS 32 when it requires the issuance of a:
AFixed number of own equity instruments (no contractual obligation to deliver cash)
BCash payment on hitting an EBITDA target
CVariable number of own equity instruments based on a future cash equivalent
DCash settlement based on a stock price formula
Answer & Solution
Correct answer: A. Fixed number of own equity instruments (no contractual obligation to deliver cash)
Ind AS 32 'fixed-for-fixed' test: equity classification requires settlement in a FIXED number of own equity instruments. Variable share-settlement, cash payments and contracts whose number of shares depends on a future amount fail the test and are financial liabilities.
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