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On October 1 of year 1, Riverrun, Inc. (RI), a calendar-year taxpayer, acquired the assets of another business in a taxable acquisition. When the purchase

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On October 1 of year 1, Riverrun, Inc. (RI), a calendar-year taxpayer, acquired the assets of another business in a taxable acquisition. When the purchase price was allocated to the assets purchased, RI determined it had a basis of $2,600,000 in goodwill for both book and tax purposes. At the end of year 1, the auditors for RI determined that the goodwill had not been impaired during the year. In year 2, however, the auditors concluded that $300,000 of the goodwill had been impaired, and they required RI to write down the goodwill by $300,000 for book purposes. Assume asset has a 10 year life and the straight-line method will be used for depreciation purposes. A. What book-tax difference associated with its goodwill should RI report in year 1? Is it favorable or unfavorable? Is it permanent or temporary? B. What book-tax difference associated with its goodwill should RI report in year 2? Is it favorable or unfavorable? Is it permanent or temporary

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