Century Company acquires the assets and liabilities of Horizon Company in a nontaxable acquisition. The acquisition results in recognition of a deferred tax liability.
Which of the following is a possible explanation for this deferred tax liability?
A.The acquisition was a bargain purchase.
B.The acquisition's cost equaled Horizon's book value.
C.Horizon had previously unreported liabilities.
D.The book value of Horizon's buildings was less than their market value.