On January 1, 2020, Abbey acquires 90 percent of Benjamin's outstanding shares. Financial information for these...
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On January 1, 2020, Abbey acquires 90 percent of Benjamin's outstanding shares. Financial information for these two companies for the years 2020 and 2021 follows (credit balances indicated by parentheses): Abbey Company: Sales Operating expenses Intra-entity gross profits in ending inventory Dividend income-Benjamin Company (included in above figures) Benjamin Company: Sales Operating expenses Dividends paid 2020 2021 $ (683,000) $(1,062,000) 446,000 (169,000) (9,000) 594,000 (237,000) (40,500) (293,000) 124,000 (10,000) (359,000) 194,000 (45,000) Assume that a tax rate of 21 percent is applicable to both companies. a. On consolidated financial statements for 2021, what are the income tax expense and the income tax currently payable if Abbey and Benjamin file a consolidated tax return as an affiliated group? b. On consolidated financial statements for 2021, what are the income tax expense and income tax currently payable if they choose to file separate returns? Amount a. Income tax expense Income tax payable b. Income tax expense Income tax payable King's Road recently acquired all of Oxford Corporation's stock and is now consolidating the financial data of this new subsidiary. King's Road paid a total of $810,000 for Oxford, which has the following accounts: Accounts receivable Inventory Land Buildings Equipment Liabilities Fair Value $ 184,000 132,000 Tax Basis $ 184,000 132,000 114,000 114,000 221,750 157,000 212,750 159,000 (272,000) (272,000) Required: a. What amount of deferred tax liability arises in the acquisition? b. What amounts will be used to consolidate Oxford with King's Road at the date of acquisition? c. On a consolidated balance sheet prepared immediately after this takeover, how much goodwill should King's Road recognize? Assume a 21 percent effective tax rate. Complete this question by entering your answers in the tabs below. Required A Required B Required C What amount of deferred tax liability arises in the acquisition? Deferred tax liability Required A Required B > Complete this question by entering your answers in the tabs below. Required A Required B Required C What amounts will be used to consolidate Oxford with King's Road at the date of acquisition? (Credit balances should be indicated with minus sign.) Amount Assigned to specific accounts < Required A Required C > King's Road recently acquired all of Oxford Corporation's stock and is now consolidating the financial data of this new subsidiary. King's Road paid a total of $810,000 for Oxford, which has the following accounts: Accounts receivable Inventory Land Buildings Equipment Liabilities Fair Value $ 184,000 132,000 Tax Basis $ 184,000 132,000 114,000 114,000 221,750 157,000 212,750 159,000 (272,000) (272,000) Required: a. What amount of deferred tax liability arises in the acquisition? b. What amounts will be used to consolidate Oxford with King's Road at the date of acquisition? c. On a consolidated balance sheet prepared immediately after this takeover, how much goodwill should King's Road recognize? Assume a 21 percent effective tax rate. Complete this question by entering your answers in the tabs below. Required A Required B Required C On a consolidated balance sheet prepared immediately after this takeover, how much goodwill should King's Road recognize? Assume a 21 percent effective tax rate. Goodwill < Required B Required C On January 1, 2020, Abbey acquires 90 percent of Benjamin's outstanding shares. Financial information for these two companies for the years 2020 and 2021 follows (credit balances indicated by parentheses): Abbey Company: Sales Operating expenses Intra-entity gross profits in ending inventory Dividend income-Benjamin Company (included in above figures) Benjamin Company: Sales Operating expenses Dividends paid 2020 2021 $ (683,000) $(1,062,000) 446,000 (169,000) (9,000) 594,000 (237,000) (40,500) (293,000) 124,000 (10,000) (359,000) 194,000 (45,000) Assume that a tax rate of 21 percent is applicable to both companies. a. On consolidated financial statements for 2021, what are the income tax expense and the income tax currently payable if Abbey and Benjamin file a consolidated tax return as an affiliated group? b. On consolidated financial statements for 2021, what are the income tax expense and income tax currently payable if they choose to file separate returns? Amount a. Income tax expense Income tax payable b. Income tax expense Income tax payable King's Road recently acquired all of Oxford Corporation's stock and is now consolidating the financial data of this new subsidiary. King's Road paid a total of $810,000 for Oxford, which has the following accounts: Accounts receivable Inventory Land Buildings Equipment Liabilities Fair Value $ 184,000 132,000 Tax Basis $ 184,000 132,000 114,000 114,000 221,750 157,000 212,750 159,000 (272,000) (272,000) Required: a. What amount of deferred tax liability arises in the acquisition? b. What amounts will be used to consolidate Oxford with King's Road at the date of acquisition? c. On a consolidated balance sheet prepared immediately after this takeover, how much goodwill should King's Road recognize? Assume a 21 percent effective tax rate. Complete this question by entering your answers in the tabs below. Required A Required B Required C What amount of deferred tax liability arises in the acquisition? Deferred tax liability Required A Required B > Complete this question by entering your answers in the tabs below. Required A Required B Required C What amounts will be used to consolidate Oxford with King's Road at the date of acquisition? (Credit balances should be indicated with minus sign.) Amount Assigned to specific accounts < Required A Required C > King's Road recently acquired all of Oxford Corporation's stock and is now consolidating the financial data of this new subsidiary. King's Road paid a total of $810,000 for Oxford, which has the following accounts: Accounts receivable Inventory Land Buildings Equipment Liabilities Fair Value $ 184,000 132,000 Tax Basis $ 184,000 132,000 114,000 114,000 221,750 157,000 212,750 159,000 (272,000) (272,000) Required: a. What amount of deferred tax liability arises in the acquisition? b. What amounts will be used to consolidate Oxford with King's Road at the date of acquisition? c. On a consolidated balance sheet prepared immediately after this takeover, how much goodwill should King's Road recognize? Assume a 21 percent effective tax rate. Complete this question by entering your answers in the tabs below. Required A Required B Required C On a consolidated balance sheet prepared immediately after this takeover, how much goodwill should King's Road recognize? Assume a 21 percent effective tax rate. Goodwill < Required B Required C
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Related Book For
Advanced Accounting
ISBN: 9781260247824
14th Edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
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