Camille, Inc., bought all outstanding shares of Jordan Corporation on January 1, 2019, for $776,000 in cash. This portion of the consideration transferred results in a fair-value allocation of $50,700 to equipment and goodwill of $90,900. At the acquisition date, Camille also agrees to pay Jordans previous owners an additional $195,000 on January 1, 2021, if Jordan earns a 10 percent return on the fair value of its assets in 2019 and 2020. Jordans profits exceed this threshold in both years. Which of the following is true?

Multiple Choice

• The $195,000 is recorded as a revaluation gain in 2021.

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

• Consolidated goodwill as of January 1, 2021, increases by $195,000.

• The additional $195,000 payment is reported as an adjustment to the beginning balance of consolidated retained earnings.