Harrison, Inc. acquires 100% of the voting stock of Rhine Company on January 1,2020 for...

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Accounting

Harrison, Inc. acquires 100% of the voting stock of Rhine Company on January 1,2020 for $400,000 cash. A contingent payment of $16,500 will be paid on April 15,2021 if Rhine generates cash flows from operations of $27,000 or more in the next year. Harrison estimates that there is a 20% probability that Rhine will generate at least $27,000 next year, and uses an interest rate of 5% to incorporate the time value of money. The fair value of $16,500 at 5%, using a probability-weighted approach, is $3,142.
What will Harrison record as its Investment in Rhine on January 1,2020?
On April 1,2021, Beatty stock closes with a market value of $8.98 per share. How many shares of stock, rounded to the next whole number, must it issue to the former owners of Gataux?

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