This podcast shares insights on practical challenges that arise in accounting for contingent consideration in business combinations.
Every Tuesday in July, Jay Seliber is taking over the podcast to share insights on business combinations, which are often significant events in a company’s life cycle. Jay takes us on a journey through a deal, beginning with the complexities of the overall acquisition accounting model, then diving into some of the more complex areas—identifying the accounting acquirer, accounting for contingent consideration, and reporting with the SEC.
To continue the series, Heather and Jay are joined by Chip Currie, another partner in PwC’s National Office, to share insights on the intersection between contingent consideration and acquisition accounting, as well as the key decision points in the multi-step accounting model.
In this episode, you’ll hear:
  • 2:25 - An overview of the accounting framework for contingent consideration arrangements from the buyer’s perspective, including:
    • 7:01 - The criteria for meeting the definition of contingent consideration
    • 12:04 - An assessment of whether the arrangement is part of the purchase price
    • 16:03 - A discussion of common pitfalls in the performing the assessment
  • 23:19 - An analysis of the accounting for contingent consideration arrangements classified as compensation expense
  • 24:25 - A discussion of the multi-step analysis of contingent consideration arrangements that is not classified as compensation expense, including:
    • 24:38 - Liability-classified contingent consideration and applying the liability versus equity accounting model
    • 29:59 - Equity-classified contingent consideration and applying the derivative accounting model
  • 41:56 - An overview of the impact of contingent consideration on earnings per share and the statement of cash flows
  • 48:40 - Final advice for clients dealing contingent consideration in a business combination

For more information, read chapters 2 and 3 of our Business combinations guide, chapter 5 of our Financing guide, and chapters 6 and 7 of our Financial statement presentation guide. Additionally, check out a prior podcast in this miniseries.
About our guests
Jay Seliber is a partner in PwC’s National office. He leverages over 30 years of experience to help clients with their most complex accounting matters, particularly in the areas of mergers and acquisitions, revenue recognition, stock compensation, earnings per share, employee benefits, restructurings, impairments, and financing transactions. Jay is presently PwC's representative on the FASB's Emerging Issues Task Force.
Chip Currie is a Partner in PwC’s National Office with over 25 years of experience assisting companies in resolving complex business and accounting issues. He concentrates on the accounting for financial instruments under both current and emerging standards and works with many of the firm's largest financial services clients and a number of non-financial service clients on treasury-related matters.
About our host
Heather Horn is PwC’s National office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series. With over 30 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.
Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to
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