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:

Peace CorporationSoft Inc.Book ValueFair ValuesBook ValueFair ValuesCash$31,000$31,000$13,000$13,000Accounts Receivable, net51,00051,00012,00012,000Inventory78,00085,0005,00010,000Deferred Tax Asset9,0004,000?Investment in Soft88,00088,000Equipment, net175,000210,00034,00047,500Patent021,000Total Assets$432,000$68,000Accounts Payable$52,000$52,000$10,000$10,000Accrued Vacation Payable13,00013,000Deferred Tax Liability4,0004,000?Long-Term Debt105,000115,0006,0006,000Common Stock130,0009,000Retained Earnings128,00039,000Total Liabilities and Equity$432,000$68,000

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.
5. Accumulated depreciation on the financial accounting records of Peace and Soft is $45,000 and $18,000, respectively.
6. The Soft patent was identified by Peace in the due diligence process and has not previously been recorded in the accounting records of Soft.
7. The book and tax bases of all other assets and liabilities of Peace and Soft are the same.

Required:

a. Compute the tax bases of the assets and liabilities for Peace and Soft, where different from the amounts recorded in the respective accounting records.

Peace Tax Basis Calculations Soft Tax Basis Calculations

Tax basis of accounts receivable ____________________________ _________________________

Tax basis of accrued vacation payable 0 0

Tax basis of equipment ___________________________ _________________________

Tax basis of patent 0 0

b. Compute the fair value of the deferred tax assets and deferred tax liabilities for Soft.

Total DTA 4,000 related to Accounts Receivable

Total DTL _____ related to Inventory, Equipment, Patent