What amount of deferred tax liability arises in acquisition

Reference no: EM131765198

Question: King's Road recently acquired all of Oxford Corporation's stock and is now consolidating the financial data of this new subsidiary. King's Road paid a total of $1,030,000 for Oxford, which has the following accounts:

	Fair Value		Tax Basis
Accounts receivable	$	144,000	$	144,000
Inventory		182,000		182,000
Land		127,000		127,000
Buildings		283,250		230,000
Equipment		298,750		247,000
Liabilities		(283,000)		(283,000)

Note: Parentheses indicate a credit balance.

a. What amount of deferred tax liability arises in the acquisition: Deferred tax liability:

b. What amounts will be used to consolidate Oxford with King's Road at the date of acquisition? (Credit balances should be indicated with minus sign.)

c. On a consolidated balance sheet prepared immediately after this takeover, how much goodwill should King's Road recognize? Assume a 30 percent effective tax rate.

Reference no: EM131765198

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