Asset Purchase, Contingent Consideration as Equity LO
Assume the same information as in Exercise except that instead of paying a cash earnout, Pritano Company agreed to issue additional shares of its $ par value common stock to the
stockholders of Succo if the average postcombination earnings over the next three years equaled or
exceeded $ The fair value of the contingent consideration on the date of acquisition was
estimated to be $ The contingent consideration earnout was classified as equity rather
than as a liability.
Required:
A Prepare the journal entries on the books of Pritano to record the acquisition on December
B On January the additional shares of Pritanos stock were issued because the
earnout targets were met. On this date, Pritanos stock price was $ per share. Prepare the
journal entry to record the issuance of the shares of stock
