Problem

Reimers Company acquires Rollins Corporation on January 1,2012. As part of the agreement,...

Reimers Company acquires Rollins Corporation on January 1,2012. As part of the agreement, the parent states that an additional $100,000 payment to the former owners of Rollins will be made in 2014, if Rollins achieves certain income thresholds during the first two years following the acquisition. How should Reimers account for this contingency in its 2012 consolidated financial statements?

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