Camille, Inc., bought all outstanding shares of Jordan Corporation on January 1, 2019, for $734,000 in cash. This portion of the consideration transferred results in a fair-value allocation of $53,400 to equipment and goodwill of $112,200. At the acquisition date, Camille also agrees to pay Jordan’s previous owners an additional $152,000 on January 1, 2021, if Jordan earns a 10 percent return on the fair value of its assets in 2019 and 2020. Jordan’s profits exceed this threshold in both years. Which of the following is true? Multiple Choice Consolidated goodwill as of January 1, 2021, increases by $152,000. The additional $152,000 payment is reported as an adjustment to the beginning balance of consolidated retained earnings. The fair value of the expected contingent payment increases goodwill at the acquisition date. The $152,000 is recorded as a revaluation gain in 2021.
Camille, Inc., bought all outstanding shares of Jordan Corporation on January 1, 2019, for $734,000 in cash. This portion of the consideration transferred results in a fair-value allocation of $53,400 to equipment and
-
Consolidated goodwill as of January 1, 2021, increases by $152,000.
-
The additional $152,000 payment is reported as an adjustment to the beginning balance of consolidated
retained earnings . -
The fair value of the expected contingent payment increases goodwill at the acquisition date.
-
The $152,000 is recorded as a revaluation gain in 2021.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
