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How should angie corporation recognize this transaction

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Question

On January 1, year 1, Angie Corporation issued 500,000 shares of its stock valued at $5 per share to acquire Nellie Corporation. The purchase agreement states that Angie Corporation will pay $300,000 in year 2 if Nellie Corporation has at least $450,000 of net income in year 2. There is a 50% chance that Nellie Corporation will meet or exceed $450,000 of net income in year 2. How should Angie Corporation recognize this transaction?

Reference no: EM132367976

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