Assuming Rhine Generates Cash Flow from Operations of $27,200 in 2017

question 98

Multiple Choice

Assuming Rhine generates cash flow from operations of $27,200 in 2017, how will Harrison record the $16,500 payment of cash on April 15, 2018 in satisfaction of its contingent obligation?

• A) Debit Contingent performance obligation $16,500, and Credit Cash $16,500.
• B) Debit Contingent performance obligation $3,142, debit Loss from revaluation of contingent performance obligation $13,358, and Credit Cash $16,500.
• C) Debit Investment in Subsidiary and Credit Cash, $16,500.
• D) Debit Goodwill and Credit Cash, $16,500.
• E) No entry.

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Definitions:

Time Premium

The portion of an option's price that exceeds its intrinsic value, representing the value placed on the remaining time until expiration.

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