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If there is also an additional cash contingent payment of $300,000 based on achieving a level of earnings in 2 years with a fair value of 1/1/2017 of $150,000 and on 12/31/2017 of $200,000. How is that accounted for at acquisition date and the subsequent date?

1. On January 1, 2017, Benis inc. acquires 100% of Bharat Corp.'s outstanding common stock by exchanging 90,000 shares of $5.00 par value common voting stock and $1,100,000 in cash. On January 1,2017 Benis voting common stock had a market value of $28.00 per share. Legal costs pertaining to the acquisition will be $180,000. Bharat's 1/1/2017 Balance sheet prior to recording the acquisition is listed below. Bharat Co: Book Value Fair Value Cash 430,000 430,000 Accounts Receivable 160,000 160,000 Inventory 200,000 340,000 Land 230,000 400,000 Building, net 450,000 550,000 Equipment, net 185,000 260,000 In process R&D 885,000 Customer Relationship 80,000 Accounts Payable (180,000) (170,000) (440,000) (400,000) (540,000) Bonds Payable Common Stocks, $3 par Paid in Capital Retained Earnings 1/1/17 (60,000) (435,000) Assume at date of acquisition (January 1, 2017) before completion of the transaction, Benis Corp had the following net assets and equity: Cash $4,900,000 Accounts Receivable $2,200,000 Building, net $6,000,000 Bonds Payable (4,000,000) Common Stock $5 par* (2,000,000) Paid in Capital (2,100,000) Retained Earning 1/1/2017 (5,000,000) ** use unissued but authorized shares in the purchase 1. On January 1, 2017, Benis inc. acquires 100% of Bharat Corp.'s outstanding common stock by exchanging 90,000 shares of $5.00 par value common voting stock and $1,100,000 in cash. On January 1,2017 Benis voting common stock had a market value of $28.00 per share. Legal costs pertaining to the acquisition will be $180,000. Bharat's 1/1/2017 Balance sheet prior to recording the acquisition is listed below. Bharat Co: Book Value Fair Value Cash 430,000 430,000 Accounts Receivable 160,000 160,000 Inventory 200,000 340,000 Land 230,000 400,000 Building, net 450,000 550,000 Equipment, net 185,000 260,000 In process R&D 885,000 Customer Relationship 80,000 Accounts Payable (180,000) (170,000) (440,000) (400,000) (540,000) Bonds Payable Common Stocks, $3 par Paid in Capital Retained Earnings 1/1/17 (60,000) (435,000) Assume at date of acquisition (January 1, 2017) before completion of the transaction, Benis Corp had the following net assets and equity: Cash $4,900,000 Accounts Receivable $2,200,000 Building, net $6,000,000 Bonds Payable (4,000,000) Common Stock $5 par* (2,000,000) Paid in Capital (2,100,000) Retained Earning 1/1/2017 (5,000,000) ** use unissued but authorized shares in the purchase

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