On January 1, 2016 the fair values of Pink Corals net assets were as follows: Current Assets 100,000 Equipment 150,000 Land 50,000 Buildings 300,000 Liabilities 80,000 On January 1, 2016, Blue Reef Company purchased the net assets of the Pink Coral Company by issuing 100,000 shares of its $1 par value stock when the fair value of the stock was $6.20. It was further agreed that Blue Reef would pay an additional amount on January 1, 2018, if the average income during the 2-year period of 2016-2017 exceeded $80,000 per year. The expected value of this consideration was calculated as $184,000; the measurement period is one year. Blue Reef paid $15,000 in professional fees to negotiate the purchase and construct the acquisition agreement and $10,000 in stock issuance costs.

Required: Prepare Blue Reefs entries:

a) on January 1, 2016 to record the acquisition

b) on August 1, 2016 to revise the contingent consideration to $170,000

c) on January 1, 2016 to settle the contingent consideration clause of the agreement for $175,000v