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On December 31, Year 5, Darrell Inc. purchased 100% of the outstanding shares of Kindersley Company for $7,500 cash. Three different values for Kindersley's balance
On December 31, Year 5, Darrell Inc. purchased 100% of the outstanding shares of Kindersley Company for $7,500 cash. Three different values for Kindersley's balance sheet accounts on the date of acquisition were as follows: All differences between carrying amount and the tax base are temporary differences for the items listed above. The patent has an estimated useful life of 8 years. Any goodwill reported on the consolidated balance sheet pertains only to Kindersley and is redundant for tax purposes. A goodwill impairment loss of $300 was reported in Year 7. The tax rate for both companies is 40%. Assume that future income taxable payable on the separate entity financial statements of the parent and subsidiary are as follows: Required (a) Calculate goodwill and future income taxes payable for the consolidated balance sheet at the date of acquisition. (b) Prepare a changes to acquisition schedule for Years 5 through 7. (c) Calculate goodwill and future income taxes payable for the consolidated balance sheet for Year 7
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