What is the meaning of statement- earn out arrangements, Financial Management

What is the meaning of statement- Earn out arrangements

These arrangements take place during acquisition of another company. Parent company agrees to pay additional money if certain events are achieved in future (i.e. certain level of profit being achieved by the subsidiary). Again IAS 37 will apply and it all rests on probability of the event being achieved. If it is less than 50% then amount won't be recognised in the financial statements, so users of the accounts would need to find that information from the notes to the accounts.

 

Posted Date: 8/31/2013 6:56:37 AM | Location : United States







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