Dosmann, Inc., bought all outstanding shares of Lizzi Corporation on January 1, 2016, for $700,000 in cash. This portion of the consideration transferred results in a fair-value allocation of $35,000 to equipment and goodwill of $88,000. At the acquisition date, Dosmann also agrees to pay Lizzi's previous owners an additional $110,000 on January 1, 2018, if Lizzi earns a 10 percent return on the fair value of its assets in 2016 and 2017. Lizzi's profits exceed this threshold in both years. Which of the following is true?
A. The additional $110,000 payments is a reduction in consolidated retaining earnings
B. The fair value of the expected contigent payment increases goodwill at the acquisition date.
C. Consolidated goodwill as of January 1, 2018, increases by $110,000.
D. The $110,000 is recorded as an expense in 2018.
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