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Assume the parent company acquires its subsidiary in a nontaxable transaction by exchanging 60,000 shares of its $2 par value Common Stock, with a fair

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Assume the parent company acquires its subsidiary in a "nontaxable" transaction by exchanging 60,000 shares of its \$2 par value Common Stock, with a fair value on the acquisition date of $25 per share. for all of the outstanding voting shares of the investee. In its analysis of the investee company, the fair value of each of the subsidiary's assets and liabilities equals their respective book values except for Property, Plant and Equipment (PPE) assets that are undervalued by $100,000, an unrecorded Customer List with a fair value of $160,000, and an unrecorded Brand Name asset valued at $240,000. And, finally, assume the tax bases of the subsidiary's pre-acquisition identifiable net assets equal their book values. The parent company's effective tax rate is 20%. A. What did the entry looklike that the parent recorded when they purchased 100% of the subsidary? 6. Complete the consolidation worksheet based upon the answers given. np: For the deferred tox liability calculate the depreciable/omortizable assets and multiply by 20%. Assume the parent company acquires its subsidiary in a "nontaxable" transaction by exchanging 60,000 shares of its \$2 par value Common Stock, with a fair value on the acquisition date of $25 per share. for all of the outstanding voting shares of the investee. In its analysis of the investee company, the fair value of each of the subsidiary's assets and liabilities equals their respective book values except for Property, Plant and Equipment (PPE) assets that are undervalued by $100,000, an unrecorded Customer List with a fair value of $160,000, and an unrecorded Brand Name asset valued at $240,000. And, finally, assume the tax bases of the subsidiary's pre-acquisition identifiable net assets equal their book values. The parent company's effective tax rate is 20%. A. What did the entry looklike that the parent recorded when they purchased 100% of the subsidary? 6. Complete the consolidation worksheet based upon the answers given. np: For the deferred tox liability calculate the depreciable/omortizable assets and multiply by 20%

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