On January 1, 2016 the Fair Values of Pink Coral's

Essay

On January 1, 2016 the fair values of Pink Coral's net assets were as follows:
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$$\begin{array} { l r } \text { Current Assets } & 100,000 \\\text { Equipment } & 150,000 \\\text { Land } & 50,000 \\\text { B uildings } & 300,000 \\\text { Liabilities } & 80,000\end{array}$$ On January 1, 2016, Blue Reef Company purchased the net assets of the Pink Coral Company by issuing 100,000 shares of its $1 par value stock when the fair value of the stock was $6.20.It was further agreed that Blue Reef would pay an additional amount on January 1, 2018, if the average income during the 2-year period of 2016-2017 exceeded $80,000 per year.The expected value of this consideration was calculated as $184,000; the measurement period is one year.Blue Reef paid $15,000 in professional fees to negotiate the purchase and construct the acquisition agreement and $10,000 in stock issuance costs.
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Required: Prepare Blue Reef's entries:
a) on January 1, 2016 to record the acquisition
b) on August 1, 2016 to revise the contingent consideration to $170,000
c) on January 1, 2016 to settle the contingent consideration clause of the agreement for $175,000
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