When the Future Income of the Acquiree Is Regarded as Uncertain

question 39

Multiple Choice

When the future income of the acquiree is regarded as uncertain, the agreement may contain a clause that requires the acquirer to provide additional consideration to the acquiree if the income of the acquiree exceeds a specified amount over some specified period. For example, A may agree to pay $100,000 to acquire B and promise to pay an additional $50,000 in two years if B earns at least $100,000 for the next two years. A is concerned that the owners of B are integral to the success of B and may not stay involved if they receive full payment immediately. This is an example of:

• A)goodwill.
• B)contingent consideration.
• C)monetary assets.
• D)intangible assets.

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Definitions:

Impaired Blood Glucose Levels

A condition where there are deviations from the normal range of blood sugar levels, either too high (hyperglycemia) or too low (hypoglycemia).

Prednisone

A synthetic corticosteroid medication used to suppress the immune system and reduce inflammation in conditions like asthma, arthritis, and certain autoimmune diseases.

Hyperglycemic

A condition characterized by an abnormally high level of glucose in the blood, often associated with diabetes.

Corticosteroids

A class of steroid hormones that are used in medicine to treat inflammation and other diseases by mimicking the effects of hormones produced by the adrenal glands.