Consideration Transferred

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Accounting glossary · Understand, connect, apply

Consideration transferred is what the acquirer gives in exchange for control of a business. It can include cash, other assets, obligations to former owners and shares issued by the acquirer.

Example

A buyer pays 400,000 in cash and issues shares with acquisition-date fair value of 100,000. If both amounts are paid for the business, consideration totals 500,000.

Remember the difference

Distinguish amounts paid for the business from separate transactions, such as payments for future employee service.

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Prepared with AI assistance. Examples are fictional and simplified for learning.

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Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.

Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.

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