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 $850,000 for Oxford, which has the following accounts:

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.

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Fair Value Tax Basis Accounts receivable.. $ 153,000 $153,000 Inventory. 141,000 136,000 276,000 141,000 Land... 136,000 Buildings.. Equipment 221,000 233,000 160,000 Liabilities. (281,000) (281,000)