Cash in a tax-free transaction

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Reference no: EM13133016

Jastoon Co. acquired all of Wedner Co. for $588,000 cash in a tax-free transaction. On that date, the subsidiary had net assets with a $560,000 fair value but a $420,000 book value and income tax basis. The income tax rate was 30%. What amount of goodwill should have been recognized on the date of the acquisition?

A) $70,000

B) $28,000

C) $(14,000)

D) $19,600

E) $65,000

Reference no: EM13133016

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