Dosmann, Inc., bought all outstanding shares of Lizzi Corporation on January 1, 2011, 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, 2013, if Lizzi earns a 10 percent return on the fair value of its assets in 2011 and 2012. Lizzi’s profits exceed this threshold in both years. Which of the following is true?

a. The additional \($110,000\) payment is a reduction in consolidated retained earnings.

b. The fair value of the expected contingent payment increases goodwill at the acquisition date.

c. Consolidated goodwill as of January 1, 2013, increases by \($110,000\).

d. The \($110,000\) is recorded as an expense in 2013.