Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. question 50 (3 points) h, inc. acquires 100% of th

Question 50 (3 points) H, Inc. acquires 100% of the voting stock of R Company...

70.2K

Verified Solution

Question

Accounting

image

Question 50 (3 points) H, Inc. acquires 100% of the voting stock of R Company on 1/1/Y1 for $400,000 cash. A contingent payment of $16,500 will be paid on 4/15/Y2 if R generates cash flows from operations of $27,000 or more in the next year. H estimates that there is a 20% probability that R 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. When recording consideration transferred for the acquisition of R on 1/1/Y1, H will record a contingent performance obligation in the amount of $2,671.60 $13,358 $3,142 O $628.40 $16,500

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students