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What amount of deferred tax liability arises in acquisition

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Reference no: EM132607269

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 $1,000,000 for Oxford, which has the following accounts:

                                                        Fair Value                        Tax Basis

Accounts receivable                 $205,000                     $205,000

Inventory                                139,000                       139,000

Land                                        118,000                         118,000

Buildings                                    292,500                        232,000

Equipment                                 268,250                         214,000

Liabilities                                  (270,000)                    (270,000)

Question a. What amount of deferred tax liability arises in the acquisition?

Question b. What amounts will be used to consolidate Oxford with King's Road at the date of acquisition?

Question c. On a consolidated balance sheet prepared immediately after this takeover, how much goodwill should King's Road recognize?

Reference no: EM132607269

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