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On January 1, year 1, the Allen Company issues 100,000 shares of its stock (which is valued at $10 per share) to acquire the Natie
On January 1, year 1, the Allen Company issues 100,000 shares of its stock (which is valued at $10 per share) to acquire the Natie Company. The purchase agreement also states that Allen will pay $200,000 in year two if Natie has net income of at least $400,000 in year 2. There is a 50% chance Natie will meet or exceed $400,000 of net income in year 2. How should Allen recognize this transaction?
Please provide FASB references in answer.
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