(7.1) The consideration transferred by ADC to OLH is an equity instrument.

(7.2) The above case constitutes a contingent consideration. According to IFRS 3 paragraph 40,
the acquirer shall recognize the contingent consideration at fair value. Since this contingent
consideration adds up to the amount being acquired by the acquirer, therefore it will affect the
goodwill to be recognized by acquirer.

(7.3) Since the contingent consideration is a provisional amount, the acquirer shall retrospectively
adjust the provisional amounts recognized at the acquisition date to reflect new information
obtained about facts and circumstances that existed as of the acquisition date and, if known, would
have affected the measurement of the amounts recognized as of that date. *may kulang pa, di ko
madugtungan*

8.1 The ADC (acquirer) shall recognize goodwill at its cost at the date of acquisition. It is the
difference between the consideration transferred and the net fair value of identifiable assets
acquired and liabilities assumed. Therefore, the goodwill is CU 17 million. It is the difference of
CU 88 million from CU 105 million.

8.2 In this situation, the consideration transferred in the business combination is CU 80 million
[(7.5 million shares x CU 10 per share) + CU 5 million]. While the identifiable net assets have a
fair value of CU 88 million. Therefore, ADC would recognize CU 8 million excess over cost as an
immediate gain.