Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On 1 January 2020, Aston Company purchased 400,000 shares from Brave Company's existing owners. Total number of shares issued by Brave Co. was 500,000. A

image text in transcribed On 1 January 2020, Aston Company purchased 400,000 shares from Brave Company's existing owners. Total number of shares issued by Brave Co. was 500,000. A reliable measure of fair value of Brave Co's share was $1.8 per share. Aston Co. was obligated to make additional payments to Brave Co. if the latter achieved the following profit benchmarks during financial year ending 31 December 2021. The discount rate used by Aston Co. is 3%. Benchmarks Payment Probability Profit greater than $30,000,000 $800,000 0.1 Profit between $20,000,000 and $500,000 0.2 $30,000,000 Profit between $10,000,000 and $200,000 0.5 $20,000,000 Profit below $10,000,000 0 0.2 Required: Compute the amount of total consideration on the acquisition date

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting Information for Decisions

Authors: John J. Wild

8th edition

125953300X, 978-1259533006

More Books

Students also viewed these Accounting questions

Question

describe backflush costing; LO1

Answered: 1 week ago