ears The additional $159,000 payment is reported as an adjustment to the beginning balance of consolidated retained earnings. Consolidated goodwill as of January 1, 2021, increases by $159,000. The $159,000 is recorded as a revaluation gain in 2021. The fair value of the expected contingent payment increases goodwill at the acquisition
ears The additional $159,000 payment is reported as an adjustment to the beginning balance of consolidated retained earnings. Consolidated goodwill as of January 1, 2021, increases by $159,000. The $159,000 is recorded as a revaluation gain in 2021. The fair value of the expected contingent payment increases goodwill at the acquisition
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 8MC
Related questions
Question
Transcribed Image Text:Camille, Inc., bought all outstanding shares of
Jordan Corporation on January 1, 2019, for
$792,000 in cash. This portion of the
consideration transferred results in a fair-
value allocation of $41,700 to equipment and
goodwill of $108,300. At the acquisition date,
Camille also agrees to pay Jordan's previous
owners an additional $159,000 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?
The additional $159,000 payment is reported
as an adjustment to the beginning balance of
consolidated retained earnings.
Consolidated goodwill as of January 1, 2021,
increases by $159,000.
The $159,000 is recorded as a revaluation
gain in 2021.
The fair value of the expected contingent
payment increases goodwill at the acquisition
date.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning