On January 1, 2016 the Fair Values of Pink Coral's

question 44

Essay

On January 1, 2016 the fair values of Pink Coral's net assets were as follows:
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$$\begin{array} { l r } \text { Current Assets } & 100,000 \\\text { Equipment } & 150,000 \\\text { Land } & 50,000 \\\text { B uildings } & 300,000 \\\text { Liabilities } & 80,000\end{array}$$ On January 1, 2016, Blue Reef Company purchased the net assets of the Pink Coral Company by issuing 100,000 shares of its $1 par value stock when the fair value of the stock was $6.20.It was further agreed that Blue Reef would pay an additional amount on January 1, 2018, if the average income during the 2-year period of 2016-2017 exceeded $80,000 per year.The expected value of this consideration was calculated as $184,000; the measurement period is one year.Blue Reef paid $15,000 in professional fees to negotiate the purchase and construct the acquisition agreement and $10,000 in stock issuance costs.
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Required: Prepare Blue Reef's entries:
a) on January 1, 2016 to record the acquisition
b) on August 1, 2016 to revise the contingent consideration to $170,000
c) on January 1, 2016 to settle the contingent consideration clause of the agreement for $175,000
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Definitions:

Ego-Syntonic

Pertaining to thoughts, impulses, and behaviors that are consistent with the self-image of an individual, often seen in conditions like Obsessive Compulsive Disorder.

Ego-Dystonic

Refers to thoughts, impulses, and behaviors that are felt to be repugnant, distressing, unacceptable, and inconsistent with one's self-concept.

Hoarding Disorder

A mental health disorder characterized by persistent difficulty discarding or parting with possessions, regardless of their actual value, leading to clutter that disrupts one's ability to use their living or work spaces.

Obsessive-Compulsive Disorder

A mental health disorder characterized by recurrent, unwanted thoughts (obsessions) and/or repetitive behaviors (compulsions) which the person feels driven to perform.