Could anyone explain indemnification asset?

How does this exactly work in the acquisition method for business combinations?


I beleive that this is referring to uncertainties about specific assets or liabilities. For example, let’s say you bought a company that included a piece of land, but there was a question on whether the company actually owned the land. Some other entity claims they have a right to the land, and it isstill going through the legal process at the acquisition date. The seller may indemnify the land, which means they would reimburse you if it turns out that the land belongs to someone else.

I woudl guess that you would probably see this more with liabilities. But maybe you see it with patent that are under dispute, or things like that.

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