Reimers Company acquires Rollins Corporation on January 1, 2017. As part of the agreement, the parent states that an additional $100,000 payment to the former owners of Rollins will be made in 2018, if Rollins achieves certain income thresholds during the first two years following the acquisition. How should Reimers account for this contingency in its 2017 consolidated financial statements?
Reimers Company acquires Rollins Corporation on January 1, 2017. As part of the agreement, the parent states that an additional $100,000 payment to the former owners of Rollins will be made in 2018, if Rollins achieves certain income thresholds during the first two years following the acquisition. How should Reimers account for this contingency in its 2017 consolidated financial statements?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Reimers Company acquires Rollins Corporation on January 1, 2017. As part of the agreement, the
parent states that an additional $100,000 payment to the former owners of Rollins will be made
in 2018, if Rollins achieves certain income thresholds during the first two years following the acquisition. How should Reimers account for this contingency in its 2017 consolidated financial statements?
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