General me miell X Calibri (Body) v11 A A maste & BI U VI a. Av 3 x V x III III D $ % A B C D ANSWER ALL ITEMS a, b, c, d below. SHOW ALL WORK IN SUPPORT OF YOUR ANSWER WHERE APPROPRIATE. IF YOU DO NOT SHOW WORK IN SUPPORT OF YOUR ANSWER YOU WILL NOT GET FULL CREDIT. Matt, Inc. acquires 100% of the voting stock of Rivers Company on January 1, 2018 for $800,000 cash. A contingent payment of $50,000 will be paid on April 15, 2019 if Rivers generates cash flows from operations of $50,000 in fiscal year 2018. Matt Inc. estimates that there is a 80% probability that Rivers Co. will generate at least $50,000 cash flow from operations in 2018 and uses an interest rate of 2% to incorporate the time value of money (1+(1+.02]). Time value money factor either divide by 1.02 or multiply by .9804. What is the amount of the contingency payment Matt Inc. would record under GAAP related to its acquisition of Rivers Company? b. What is the journal entry at 1/1/2018 Matt Inc. would record for its acquisition of Rivers Company? SUMMARY PROB 1 TAB 1 PROB 1 TAB 2 PROB 2 IMPAIRMENT PROB 3 co H uy, Larry ReMAU DOU Items: 609 TPD Student Orientation New: Cabrini Learn Student Dala Insert Page Layout HVIL Draw Formulas = General Calibri (Body) 11 A A BI U V Iva. Av = ab v E- DO $ % 9 x & fx I.DE Assume Rivers achieves $100,000 cash flows from operations in 2018. What Journal Entry would Matt Inc. record in 2018 to reflect this? The amount of contingency obligation you determined in "b." above is When will Matt Inc. pay this amount to Rivers Company? a. On April 15, 2019 b. No later than April 15, 2019 c. On December 31, 2018 d. On December 31, 2019 e. Never