Business, 02.11.2019 05:31 kaquino983

Dosmann, inc., bought all outstanding shares of lizzi corporation on january 1, 2016, for $700,000 in cash. this portion of the consideration transferred results in a fair-value allocation of $35,000 to equipment and goodwill of $88,000. at the acquisition date, dosmann also agrees to pay lizzi’s previous owners an additional $110,000 on january 1, 2018, if lizzi earns a 10 percent return on the fair value of its assets in 2016 and 2017. lizzi’s profits exceed this threshold in both years. which of the following is true?
a. the additional $110,000 payments is a reduction in consolidated retaining earnings
b. the fair value of the expected contigent payment increases goodwill at the acquisition date.
c. consolidated goodwill as of january 1, 2018, increases by $110,000.
d. the $110,000 is recorded as an expense in 2018.

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Dosmann, inc., bought all outstanding shares of lizzi corporation on january 1, 2016, for $700,000 i...

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