Darnell Ltd. acquired 60 percent of Tisha Co. The acquisition calls for Darnell to issue an additional 100 shares to Tisha in one year if Tisha meets a predetermined sales goal. This contingent consideration a. should be reported only in the notes to the financial statement. b. should be valued at its fair value as of the acquisition date. c. should be valued at fair value as of the acquisition date and revalued at the year-end. d. should not be reported unless the goal is met.
Darnell Ltd. acquired 60 percent of Tisha Co. The acquisition calls for Darnell to issue an additional 100 shares to Tisha in one year if Tisha meets a predetermined sales goal. This contingent consideration a. should be reported only in the notes to the financial statement. b. should be valued at its fair value as of the acquisition date. c. should be valued at fair value as of the acquisition date and revalued at the year-end. d. should not be reported unless the goal is met.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ddd1.
Transcribed Image Text:Darnell Ltd. acquired 60 percent
of Tisha Co. The acquisition calls
for Darnell to issue an additional
100 shares to Tisha in one year if
Tisha meets a predetermined
sales goal. This contingent
consideration
a. should be reported only in the
notes to the financial statement.
b. should be valued at its fair
value as of the acquisition date.
c. should be valued at fair value as
of the acquisition date and
revalued at the year-end.
d. should not be reported unless
the goal is met.
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