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Lana71 [14]
3 years ago
8

Pecan acquires Southern in an acquisition reported as a merger. The acquisition results in $50 million in goodwill. The acquisit

ion cost includes an earnings contingency, valued at $1 million at the date of acquisition. Within the measurement period, additional information on Southern's expected future performance at the date of acquisition reveals that the earnout actually had a fair value of $200,000 at the date of acquisition. The entry to record the new information includes a credit of $800,000 to:
Business
1 answer:
azamat3 years ago
3 0

Answer:

Dr Earnings contingency liability $800,000

Cr Goodwill $800,000

Explanation:

Based on the information given the appropiate journal entry to record the new information includes a credit of $800,000 to:Dr Earnings contingency liability $800,000 and Cr Goodwill $800,000 reason been that the acquisition cost is lesser.

Dr Earnings contingency liability $800,000

Cr Goodwill $800,000

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