A business combination involves a contingent consideration. It is considered 80% probable that a payment of $700,000 will become payable three years after the acquisition date. Using a 5% discount rate, what liability should be recorded for the contingent consideration on the acquisition date? Multiple Choice $700,000 $560,000 $483,749 $604,686

A business combination involves a contingent consideration. It is considered 80% probable that a payment of $700,000 will become payable three years after the acquisition date. Using a 5% discount rate, what liability should be recorded for the contingent consideration on the acquisition date? Multiple Choice $700,000 $560,000 $483,749 $604,686

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

ChapterM: Time Value Of Money Module

Section: Chapter Questions

Problem 4C

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A business combination involves a contingent consideration. It is considered 80% probable that a payment of $700,000 will become payable three years after the acquisition date. Using a 5% discount rate, what liability should be recorded for the contingent consideration on the acquisition date? Select one: a. $604,686 b. $700,000 c. $483,749 d. $560,000
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