An earnout agreement requires an additional payment of up to $10M based on three-year post-acquisition EBITDA. After the acquisition date, the estimated fair value of the earnout increases by $1M due to better-than-expected performance. How is this change recorded?
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A
As an adjustment to goodwill
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B
As a charge to earnings in the period of change
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C
As an increase to additional paid-in capital
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D
As an adjustment to the purchase price allocation within the measurement period