Company: HCTI
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001213900-25-026218
Chunk: 911

Company: Healthcare Triangle, Inc.
Filing Date: 2025-03-31
Form: 10-K
Item: Item 7
Chunk 911
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 approach to estimates
and judgments regarding our allowance for doubtful accounts is reasonable, actual results could differ and we may be exposed to increases
or decreases in required allowances that could be material.

Business Combinations

As per ASC 805-50 a common-control transaction
does not meet the definition of a business combination because there is no change in control over the net assets. The accounting for these
transactions is addressed in the “Transactions Between Entities Under Common Control”. The net assets are derecognized by
the transferring entity and recognized by the receiving entity at the historical cost of the entities under common control. Any difference
between the proceeds transferred or received and the carrying amounts of the net assets is recognized in equity in the transferring and
receiving entities’ separate financial statements and eliminated in consolidation. The change in accounting principle is applied
retroactively for all periods presented.

We account for business combinations using the
acquisition method, which requires the identification of the acquirer, the determination of the acquisition date and the allocation of
the purchase price paid by the acquirer to the identifiable tangible and intangible assets acquired, the liabilities assumed, including
any contingent consideration and any non-controlling interest in the acquiree at their acquisition date fair values. Goodwill represents
the excess of the purchase price over the fair value of net assets acquired, including the amount assigned to identifiable intangible
assets. Identifiable intangible assets with finite lives are amortized over their useful lives. Acquisition-related costs are expensed
in the periods in which the costs are incurred. The results of operations of acquired businesses are included in our consolidated financial
statements from the date of effective control.

Valuation of Contingent Earn-out Consideration.

Acquisitions may include contingent consideration
payments based on the achievement of certain future financial performance measures of the acquired company. Contingent consideration is
required to be recognized at fair value as of the acquisition date. We estimate the fair value of these liabilities based on financial
projections of the acquired companies and estimated probabilities of achievement. We believe our estimates and assumptions are reasonable,
however, there is significant judgment involved. We evaluate, on a routine, periodic basis, the estimated fair value of the contingent
consideration and changes in estimated fair value, subsequent to the initial fair value estimate at the time of the acquisition, will
be reflected in income or expense in the consolidated statements of operations. Changes in the fair value of contingent consideration
obligations may result from changes in discount periods and rates, changes in the