+ Johnson paid a fixed consideration of $275,000 to acquire 100% of Willis Corporation in a statutory merger. In addition, Johnson also agreed to pay the shareholders of Willis $0.40 in

cash for every dollar in income from continuing operations of the combined entity over $75,000 in the first three years following acquisition. Johnson projects that there is a 20% (45%, 35%) probability that the income from continuing operations in the first three years following acquisition is $65,000 ($80,000, $115,000 respectively). Johnson uses a discount rate of 4%. Information for Willis Corporation immediately before the merger was as follows: Book value Fair value Current assets Plant assets Liabilities 40,000 120,000 50,000 50,000 70,000 45,000 Previously unreported items identified as belonging to Willis:/nContracts under negotiation with potential customers In-process research and development Skilled workforce Recent favorable press reports on Willis Proprietary databases Fair value 15,000 21,000 23,000 2,000 7,000 (i) Show your determination of the contingent consideration. (ii) Show your determination the goodwill to be reported in this acquisition.