Reference no: EM132500081

Question - Assume the facts are slightly different in Part A. Assume that, as part of the acquisition, Gamma also promises to pay an extra amount to the shareholders of Beta based on the amount of Beta's Year 1 and Year 2 income. This payment could be zero, if Beta does poorly, or some other amount, up to $4 million, contingent on how well Beta does. A valuation expert says the fair value of this contingent consideration as of the acquisition date was $2 million. What would be different, if anything, about the entries needed on the date of consolidation?

Using the same facts as in Part B, assume that at the end of Year 2, Beta has done well enough that Gamma must make a $3.5 million payment to the Beta shareholders. What would an entry look like when Gamma makes the $3.5 million payment?