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 Corporation Book Value Fair values $38.000 $30,000 59,000 59,000 75,000 82,000 12.000 90,000 90,000 360,000 195.000 Soft The Book Value Fair values $9,000 59.000 13,000 13,000 10,000 3.000 4,000 Cash Accounts Receivable, net Inventory Deferred Tax Asset Investment in Sort Equipment, net Patent Total Assets Accounts Payable Accrued Vacation Payable Deferred Tax Liability Long-Term Debt Common Stock Retained Earnings Total Liabilities and Equity 33,000 562000 513,000 40,000 24,000 $13,000 $53,000 13,000 4,000 95,000 130,000 139,000 $44,000 $ 53,000 13,000 185,000 9,000 2.000 9,900 10,000 28,000 16.000 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 vocation 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 tox liability in both Peace and soft relates solely to the book-tax differences ansing from the depreciation of their respective equipment. 5. Accumulated depreciation on the financial accounting records of Peace and Soft is $45.000 and $17,000, respectively 6. The Soft patent was identified by Peace in the due diligence process and hos not previously been recorded in the accounting records of Soft 7. The book and tax bases of all other assets and Hobilities of Peace and Soft are the some Required: 1. 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 Tak Basis Calculations Te basis of accounts receivable Tax basis of accrued vacation payable Tax basis of equipment Tax basis of patent b. Compute the fair value of the deferred tax assets and deferred tax liabilities for Soft. Total DTA Total DTL related to related to c. Prepare all of the consolidation entries needed to prepare the worksheet for Peace and Soft at the date of acquisition. Of no entry is required for a transaction/event, select "No journal entry required" in the first account field.) view transaction list Consolidation Worksheet Entries Record the basic consolidation entry. Note: Enter debits before credits d. Prepare the consolidation worksheet for Peace and Soft at the date of acquisition (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) PEACE CORPORATION AND SUBSIDIARY Consolidation Balance Sheet Worksheet December 31, 20X1 Consolidation Entries Peace Corp. Soft Co. DR CR Consolidated Balance Sheet Cash Accounts receivable Inventory Deferred tax asset Equipment Less: Accumulated depreciation Investment in Son Patent Goodwill Total Assets $ 015 05 0s 0 $ 0 Liabilities & Stockholders' Equity Accounts payable Accrued vacation payable Deferred tax liability Long-term dett Common stock Retained earnings Total Liabilities & Equity 5 05 os 0$ 05 0 Peace Corporation acquired 100 percent of Soft Inc. in a nontaxable transaction on December 31, 20X1. The following balance shee information is available immediately following the transaction: Peace Corporation Book Value Fair Values $ 38,eee $ 38,00 59, eee 59,000 75, eee 82, 12,000 90,000 90,000 160,000 195,000 Soft Inc. Book Value Fair Values $ 9, eee $ 9, eee 13,000 13,000 4,000 10,000 3,000 > 33,000 48,000 24,000 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 $62,eee $13,000 $13,000 $ 53,000 13,000 $434,000 $ 59,800 13, eee 4, 95, eee 130, eee 139, eee $434,000 ? 9,800 105,000 2,000 9,000 10, een 28,000 $62,600 total Lilities and quity 3434 Bee 562.ee Additional Information 1. The current and future effective tax rate for both Peace and soft is 40 percent 2. The recorded deferred tox asset for Peace relates to the book tax differences arising from the allowance for doubtful Accounts and the Accrued vocation 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 doubt accounts 4. The recorded deferred tax liability in both Peace and Soft relates solely to the book tax differences arising from the depreciation or their respective equipment 5. Accumulated depreciation on the financial accounting records of Peace and Soft is $45.000 and $17.000, 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 2 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 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 Tax basis of equipment Tax basis of patent b. Compute the fair value of the deferred tax assets and deferred tax liabilities for Soft. Total DTA Total DTL related to related to c Prepare all of the consolidation entries needed to prepare the worksheet for Peace and Soft at the date of acquisition. If no entry required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Consolidation Worksheet Entries