Darnell Ltd. acquired 60 percent of Tisha Co. The acquisition calls for Darnell to issue an additional 100 shares to Tisha in one year if Tisha meets a predetermined sales goal. This contingent consideration a. should be reported only in the notes to the financial statement. b. should be valued at its fair value as of the acquisition date. c. should be valued at fair value as of the acquisition date and revalued at the year-end. d. should not be reported unless the goal is met.
Darnell Ltd. acquired 60 percent of Tisha Co. The acquisition calls for Darnell to issue an additional 100 shares to Tisha in one year if Tisha meets a predetermined sales goal. This contingent consideration a. should be reported only in the notes to the financial statement. b. should be valued at its fair value as of the acquisition date. c. should be valued at fair value as of the acquisition date and revalued at the year-end. d. should not be reported unless the goal is met.
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 1BCRQ
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Darnell Ltd. acquired 60 percent of Tisha Co. The acquisition calls for Darnell to issue an additional 100 shares to Tisha in one year if Tisha meets a predetermined sales goal. This contingent consideration
a. should be reported only in the notes to the financial statement.
b. should be valued at its fair value as of the acquisition date.
c. should be valued at fair value as of the acquisition date and revalued at the year-end.
d. should not be reported unless the goal is met.
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