Definition
Deferred acquisition payment – Part of the price in a business sale that is payable only if conditions are met later, such as an earnings or production target, a regulatory approval or a commodity-price level. The buyer records a liability at fair value on the deal date; the seller, if it sold a business, records the right to receive the payment as a contingent consideration asset. Both sides remeasure the fair value every reporting period through profit or loss, so the line can swing a reported result by a large amount without any cash moving. The window in which the condition is tested, and how the fair value is estimated, decide how long the exposure lasts and how much judgement sits in the number. Found In: Notes to the financial statements (business combinations or disposals, fair value of financial instruments), and the balance sheet (as a liability for the buyer, an asset for the seller)