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Porpoise acquires 100% of Sunfish in a tax-free business combination. The applicable income tax rate is 30%. Based on the following information about the assets
Porpoise acquires 100% of Sunfish in a tax-free business combination. The applicable income tax rate is 30%. Based on the following information about the assets and liabilities of Sunfish, what amount should Porpoise record as a deferred tax balance for this acquisition for purposes of consolidation on the date of acquisition? Enter a minus sign to denote a credit (e.g.-200).
Old book basis | Old tax basis | Fair value | |
Cash | $200,000 | $200,000 | $200,000 |
Equipment, net of depreciation | 1,000,000 | 500,000 | 750,000 |
Patents | 0 | 0 | 2,060,350 |
Accounts payable | (300,000) | (300,000) | (300,000) |
Deferred income taxes payable | (150,000) | NA | ? |
Notes payable | (200,000) | (200,000) | (230,000) |
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