Peace Corporation acquired 100 percent of Soft Inc. In a nontaxable transaction on December 31, 20X1. The following balance sheet Information is available immediately following the transaction: Cash Accounts Receivable, net Inventory: Deferred Tax Asset Investment in Soft Equipment, net Patent Total Assets Accounts Payable: Accrued Vacation Payable Deferred Tax Liability Long-Term Debt Common Stock Retained Earnings Total Liabilities and Equity Peace Corporation Soft Inc. Book Value Fair Values Book Value Fair Values $ 39,000 $ 39,000 $11,000 $11,000 52,000 52,000 16,000 16,000 78,000 85,000 6,000 12,000 11,000) 5,000 81,000 81,000 165,000 200,000 28,000 41,500 29,000 $426,000 $66,000 $ 57,000 $ 57,000 $12,000 $12,000 14,000 14,000 4,000 2,000 > 100,000 110,000 1 8,000 8,000 130,000 121,000 $426,000 9,000 35,000 $66,000 Additional Information 1. The current and future effective tax rate for both Peace and Soft is 40 percent. 2. The recorded deferred tax asset for Peace relates to the book-tax differences arising from the allowance for doubtful Accounts and the Accrued vacation payable. The expenses associated with each of these amounts will not be deductible for tax purposes until the related accounts receivable are written off or until the employee vacation is actually paid out 3. The recorded deferred tax asset for Soft is related solely to the book-tax difference arising from the allowance for doubtful accounts. 4. The recorded deferred tax liability in both Peace and Soft relates solely to the book-tax differences arising from the depreciation of their respective equipment.