Question
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
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 $1,020,000 for Oxford, which has the following accounts:
| Fair Value | Tax Basis | |||||
| Accounts receivable | $ | 210,000 | $ | 210,000 | ||
| Inventory | 192,000 | 192,000 | ||||
| Land | 175,000 | 175,000 | ||||
| Buildings | 187,000 | 142,000 | ||||
| Equipment | 222,750 | 154,000 | ||||
| Liabilities | (223,000 | ) | (223,000 | ) | ||
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What amount of deferred tax liability arises in the acquisition?
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What amounts will be used to consolidate Oxford with King's Road at the date of acquisition?
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On a consolidated balance sheet prepared immediately after this takeover, how much goodwill should King's Road recognize? Assume a 40 percent effective tax rate.
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Financial Accounting
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
IFRS 3rd edition
1118978080, 978-1119153726, 1119153727, 978-1119153702, 978-1118978085
