When negotiating a business acquisition, buyers sometimes agree to pay extra amounts to sellers in the future if performance metrics are achieved over specified time horizons. How should buyers account for such contingent consideration in recording an acquisition?
a. The fair value of the contingent consideration is expensed immediately at acquisition date.
b. The fair value of the contingent consideration is included in the overall fair value of the consideration transferred, and a liability or additional owners' equity is recognized.
c. The amount ultimately paid under the contingent consideration agreement is added to goodwill when and if the performance metrics are met.
d. The fair value of the contingent consideration is recorded as a reduction of the otherwise determinable fair value of the acquired firm.
Answers (1)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “When negotiating a business acquisition, buyers sometimes agree to pay extra amounts to sellers in the future if performance metrics are ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Delta Technologies, Inc., operates in a perfectly competitive market and has experienced economies of scale because of advanced technologies that have allowed it to make production more efficient. Delta Technologies, Inc.
Answers (1)
On December 1, Year 4, Tigg Mortgage Co. gave Pod Corp. a $200,000, 12% loan. Pod received proceeds of $194,000 after the deduction of a $6,000 nonrefundable loan origination fee.
Answers (1)
After preparing its financial statements for June, Pinnacle Corporation realizes that its income statement shows total revenues that are $500 too high and total expenses that are $500 too low.
Answers (1)
Janitor Supply produces an industrial cleaning powder that requires 38 grams of material at $0.50 per gram and 0.25 direct labor hours at $16.00 per hour. Overhead is applied at the rate of $18 per direct labor hour.
Answers (1)
The spoon made of silver is a spherical mirror
Answers (1)
New Questions in Business
China has a collectivist culture. how do you believe that this will affect managers in a starbucks store?
Answers (1)
XYZ title, in preparing a title commitment for a transaction set to close on July 1, 2009, comes across a deed from July 1, 1988 that is improperly acknowledged. What notation should they put on the title commitment?
Answers (1)
When a firm in perfect competition has economic profit is equal to zero?
Answers (1)
Workers who receive benefits are often less motivated. True or false.
Answers (1)
Examples of transaction costs include (check all that apply) : A. the cost of the externality. B. the cost of monitoring an agreement. C. the cost of drafting a contract or agreement. D.
Answers (1)