Harrison, Inc. acquires 100% of the voting stock of Rhine Company on January 1, 2010 for $400,000 cash. A contingent payment of $16,500 will be paid on April 15, 2011 if Rhine generates cash flows from operations of $27,000 or more in the next year. Harrison estimates that there is a 20% probability that Rhine will generate at least $27,000 next year, and uses an interest rate of 5% to incorporate the time value of money. The fair value of $16,500 at 5%, using a probability weighted approach, is $3,142. When recording consideration transferred for the acquisition of Rhine on January 1, 2010, Harrison will record a contingent performance obligation in the amount of:

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When recording consideration transferred for the acquisition of Rhine on January 1, 2010, Harrison will record the contingent payment as a liability at its fair value. Since the contingent payment is dependent on Rhine's cash flows from operations meeting a certain threshold, it is a contingent performance obligation. The fair value of the obligation using a probability-weighted approach, at 5%, is $3,142. Therefore, the answer is option C.