A Business Combination Involves a Contingent Consideration

question 8

Multiple Choice

A business combination involves a contingent consideration. It is considered 70% probable that a payment of $500,000 will become payable three years after the acquisition date. Using a 7% discount rate, what liability should be recorded for the contingent consideration on the acquisition date?

• A) $285,704
• B) $350,000
• C) $408,149
• D) $500,000

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Definitions:

Discrimination

The unfair or biased treatment of people from various groups, particularly based on their race, age, or gender.

Overweight Applicants

Candidates for a position who are perceived or actually weigh more than what is considered healthy for their height, potentially facing bias.

Leptin Levels

The concentration of leptin, a hormone primarily released by fat cells, which plays a key role in regulating energy intake and expenditure, including appetite and hunger.

Ghrelin Levels

Concentrations of ghrelin, a hormone that stimulates appetite, indicating hunger levels.