A Business Combination Involves a Contingent Consideration

Multiple Choice

A business combination involves a contingent consideration. It is considered 70% probable that a payment of $500,000 will become payable three years after the acquisition date. Using a 7% discount rate, what liability should be recorded for the contingent consideration on the acquisition date?

A) $285,704
B) $350,000
C) $408,149
D) $500,000