As part of the acquisition agreement

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Reference no: EM131261492

As part of the acquisition agreement, Akron Corporation agrees to pay the former shareholders of Cleveland Company $0.35 in cash for every dollar of gross revenues above $4,000,000 reported at the end of the first year following acquisition. Akron projects the following gross revenues outcomes for the year: Gross revenues Probability $2,800,000 0.10 3,600,000 0.20 4,450,000 0.30 5,200,000 0.25 6,000,000 0.15 Using a 5 percent discount rate, what is the appropriate value to be reported as an earnings contingency liability on Akron's books at the date of acquisition?

Reference no: EM131261492

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