What are the accounting ramifications of each of the three following situations involving the payment of contingent

Question:

What are the accounting ramifications of each of the three following situations involving the payment of contingent consideration in an acquisition?

a. P Company issues 100,000 shares of its $50 fair value ($1 par) common stock as payment to buy S Company on January 1, 2011. P agrees to pay $100,000 cash two years later if S income exceeds an income target. The target is exceeded.

b. P Company issues 100,000 shares of its $50 fair value ($1 par) common stock as payment to buy S Company on January 1, 2011. P agrees to issue 10,000 additional shares of its stock two years later if S income exceeds an income target. The target is exceeded.

c. P Company issues 100,000 shares of its $50 fair value ($1 par) common stock as payment to buy S Company on January 1, 2011. P agrees to issue 5,000 additional shares two years later if the fair value of P shares falls below $50 per share. Two years later, the stock has a fair value below $50, and added shares are issued to S.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...