Chapter 2, Problem 44E

a.

To determine

Explain the valuation approaches that will be used by the Incorporation, M and Co. for the acquisition of company, OE and recognize the assets to which each will relate.

b.

To determine

Detail about the subjectivity which will be involved in each evaluation method used for

the acquisition of company, OE and list the kind of assumptions that will be require to

follow under each approach.

c.

To determine

Mention the total possible continent payments for achievement of clinical and regulatory

milestones regarding the acquisition of company, OE and also mention the acquisition

date fair value of the potential future payments. Explain the reason why company, OE

transaction will include the contingent payments instead of cash consideration equal to

the contingent-payment acquisition-date fair value.

d.

To determine

Prepare the journal entry related to the contingent payments that Incorporation, M and

Co. will make on July, 2017.