Pecan acquires Southern in an acquisition reported as a merger. The acquisition results in $50 million in goodwill. The acquisition cost includes an earnings contingency, valued at $1 million at the date of acquisition. Within the next year, increases in the demand for Southern's products subsequent to acquisition require that the earnout be revalued to $1,800,000. The entry to record the new information includes a debit of $800,000 to:

Question

Quizplus · Accepted Answer

The change in earnout value is due to subsequent events and is therefore not a correction of the initial acquisition entry. The entry to record the revaluation is:
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Pecan Acquires Southern in an Acquisition Reported as a Merger