Reimers Company acquires Rollins Corporation on January 1, 2014. As part of the agreement, the parent states

Question:

Reimers Company acquires Rollins on January 1, 2014. As part of the agreement, the parent states that an additional $100,000 payment to the former owners of Rollins will be made in 2016, if Rollins achieves certain income thresholds during the first two years following the acquisition. How should Reimers account for this contingency in its 2014 consolidated financial statements?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...