Question: On December 31, year 1, X corp. acquired Y corp. Before the acquisition, a product lawsuit seeking 10,000,000 in damages was filed against Y corp.

On December 31, year 1, X corp. acquired Y corp. Before the acquisition, a product lawsuit seeking 10,000,000 in damages was filed against Y corp. As of the acquisition date, X corp. believed that it was probable that a liability existed and that the fair value is 5,000,000. What should be the amount X corp. to record as liability as of December 31, year 1? a. 0 b. 10,000,000 c. 7,500,000 d. 5,000,000

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