Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik

Exercise 3

Reimers Company acquires Rollins Corporation on January 1, 2010.As part of the agreement, the parent states that an additional $100,000 payment to the former owners of Rollins will be made in 2012, depending on the achievement of certain income thresholds during the first two years following the acquisition.How should Reimers account for this contingency in its 2010 consolidated financial statements