Company: PSEWF
Filing Date: 2025-03-04
Form Type: 20-F
Source: 0000950170-25-032340
Chunk: 121

Company: Paysafe Ltd
Filing Date: 2025-03-04
Form: 20-F
Item: Item 5
Chunk 121
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 the use of significant estimates and assumptions. The acquisition method of accounting for business combinations requires us to estimate the fair value of assets acquired and liabilities assumed to properly allocate purchase price consideration between assets that are amortized and goodwill. Although we believe the assumptions and estimates we have made are reasonable, they are based in part on historical experience, market conditions and information obtained from management of the acquired companies and are inherently uncertain. Examples of critical estimates in valuing acquired assets and assumed liabilities include but are not limited to:

• Future expected cash flows;

• Historical and expected customer attrition rates and anticipated growth in revenue from acquired customers;

• Expected use of acquired assets; and

• Discount rates

When a business combination involves contingent consideration, we record a liability for the estimated cost of such contingencies when expenditures are probable and reasonably estimable. A significant amount of judgment is required to estimate and quantify the potential liability in these matters. We engage outside experts as deemed necessary or appropriate to assist in the calculation of the liability, however management is responsible for evaluating the estimate. We measure our contingent liabilities at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy. We reassess the estimated fair value of the contingent consideration each financial reporting period over the term of the arrangement. Any resulting changes identified subsequent to the measurement period are recognized in earnings and could have a material effect on our results of operations. In the current year, the Company did not complete any business combinations.

Revenue Recognition

Application of the accounting principles in GAAP related to the measurement and recognition of revenue requires us to make certain judgments. Complex arrangements with nonstandard terms and conditions may require significant contract interpretation to determine the appropriate accounting.

An area of significant judgment for the Company is the determination of the principal agent consideration as it relates to the payment processing services provided by the Company. In making this evaluation, we consider whether the Company has the ability to direct the use of and obtain substantially all of the benefits from services provided by the card issuing financial institutions and the fees charged by payment networks. We consider indicators including determination of the party that is responsible for fulfillment of the performance obligations in the contract, as well as the party who has the ability to determine the pricing of the related services in our contracts with customers.

For the Company’s Merchant Solutions segment, the Company has concluded that its performance obligation is to facilitate payment services that are provided by other parties and therefore the nature of the Company's performance obligation is that of an agent. The Company does not have the ability to direct