QUESTION 1 Not changed since last attempt Points out of 20.00 P Flag question Earnings Contingency, In-Process R&D, Bargain Purchase On January 2, 2012, Fiser, Inc. acquired Vixen Pharmaceuticals for $1.3 billion cash, in a merger. Vixen had two promising products for treating common infections under review by the U.S. Food and Drug Administration. The balance sheets of Fiser and Vixen, immediately prior to the acquisition, are below. Fair value information appears for Vixen's reported assets and liabilities. Fiser, Inc. Vixen Pharmaceuticals (in thousands) Book Value Book Value Fair Value Current assets $6,000,000 $300,000 $300,000 Property, plant and equipment 50,000,000 9,000,000 5,000,000 Patents 10,000,000 500,000 3,500,000 Total assets $66,000,000 $9,800,000 $8,800,000 Liabilities $31,000,000 $8,400,000 $8,400,000 Capital stock 20,000,000 3,550,000 Retained earnings 15,000,000 (2,150,000) Total liabilities and equity $66,000,000 $9,800,000 $1 billion of the purchase price was allocated to previously unreported in-process research and development attributed to Vixen's products under development. The purchase price was low due to Vixen's poor performance in previous yearsVixen reported a retained earnings deficit of $2.15 billion as of the date of acquisition. To close the deal, Fiser agreed to pay the former owners of Vixen $2 for every dollar of total revenue above $50 million reported on sales of Vixen's products over the next two years. This payment, if made at all, would occur at December 31, 2013. Fiser expects that there is only a 10 percent chance the payment will be made, as follows