Baratheon Company purchases all of Tyrell Company for $450,000 in cash. On that date, the subsidiary has

Question:

Baratheon Company purchases all of Tyrell Company for $450,000 in cash. On that date, the subsidiary has net assets with a $454,000 fair value but a $310,000 book value and tax basis. The tax rate is 40 percent. Neither company has reported any deferred income tax assets or liabilities. What amount of should be recognized on the date of the acquisition?
a. $53,600
b. $123,600
c. $23,600
d. $39,600
Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of...