Question
Acquisition agreements sometimes include a provision requiring an increase in the cash price contingent upon investee's profits exceeding a specified level within a certain time
Acquisition agreements sometimes include a provision requiring an increase in the cash price contingent upon investee's profits exceeding a specified level within a certain time period. Regarding the contingent consideration, acquisition accounting requires at acquisition date:
Select one:
A. Recognition of a liability at its fair value, but with no effect on the purchase price
B. Recognition of a liability in the amount expected to be ultimately paid
C. Recognition of a liability at its fair value, resulting in an increase in goodwill
D. No disclosure of the contingent consideration because of the high degree of uncertainty
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