Comprehensive: Acquisition of Common Stock for Cash Assume the same information as in Prob¬
lem 4-1 except that PBX Company acquired all the outstanding common stock of Sprint Company rather than acquiring all Sprint’s assets and assuming all its liabilities.
Required Respond to requirements 2-10 in Problem 4-1. Then continue with the following requirements:
11. Prepare the entry that PBX makes to record the combination.
12. Where is the goodwill that PBX paid for recorded?
13. Tax questions based on the Appendix (optional):

a. What is the treatment for tax-reporting purposes?

b. If the combination is taxable, who is taxed?

c. Do the selling shareholders have a taxable gain or a taxable /oss?

d. Assuming the selling shareholders were all initial founders of Sprint, calculate their taxable gain or loss in total.

e. In what asset does PBX have a tax basis}

f. How much is its tax basis in this asset?
g. Does the tax basis of Sprint’s land, buildings, and equipment change?