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Business, 02.08.2019 19:10 cordovatierra16

Beatty, inc. acquires 100% of the voting stock of gataux company on january 1, 2017 for $80,000, consisting of $20,000 in cash and 6,000 shares of stock. a contingent payment of $12,000 in cash will be paid on april 1, 2018 if gataux generates cash flows from operations of $26,500 or more in the next year. beatty estimates that there is a 30% probability that gataux will generate at least $26,500 next year, and uses an interest rate of 4% to incorporate the time value of money. the fair value of $12,000 at 4%, using a probability-weighted approach, is $3,461. a contingent payment of $20,000, payable in stock, will be paid to the former owners of gataux on april 1, 2018 if the market value of beatty stock drops below $10 per share. beatty estimates there is a 15% probability that its share price will not exceed that threshold. using the same interest rate and probability-weighted approach, beatty calculates the market value of the stock contingency to be $2,884. what will beatty record as its investment in gataux on january 1, 2017?

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Beatty, inc. acquires 100% of the voting stock of gataux company on january 1, 2017 for $80,000, con...
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