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 $ 38,000 51,000 51,000 80,000 87,000 11,000 90,000 90,000 175,000 210,000 Soft Inc. Book Value Fair Values $ 8,000 $ 8,000 16,000 16,000 7,000 10,000 4,000 ? 34,000 48,000 25,000 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 $ 53,000 11,000 $69,000 $14,000 $14,000 4 $445,000 $ 53,000 11,000 4,000 105,000 150,000 122,000 $445,000 115,000 7 10,000 4,000 10,000 9,000 32,000 $69,000 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 $41,000 and $16,000, 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 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 view transaction list Consolidation Worksheet Entries