A company acquires a subsidiary on 31 December 20X6 for $600,000 and performs a fair value...

  

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A company acquires a subsidiary on 31 December 20X6 for $600,000 and performs a fair value exercise as at that date. Assuming a tax rate of 40%. The deferred tax implications of the acquisition may therefore be as follows: (Numbers are included for the purpose of illustration.) Fair value Property, plant and equipment Accounts receivable Inventory Pension liability Accounts payable Deferred tax $000 270 210 174 (30) (120) (9) 495 Tax base Temporary differences $000 $000 115 155 210 124 (120) Not applicable Required: (1) How much Temporary difference? (2) How much goodwill without considering deferred tax liability? (3) How much deferred liability arising on fair value exercise? (4) How much goodwill if considering deferred tax liability? 50 (30) " 135 A company acquires a subsidiary on 31 December 20X6 for $600,000 and performs a fair value exercise as at that date. Assuming a tax rate of 40%. The deferred tax implications of the acquisition may therefore be as follows: (Numbers are included for the purpose of illustration.) Fair value Property, plant and equipment Accounts receivable Inventory Pension liability Accounts payable Deferred tax $000 270 210 174 (30) (120) (9) 495 Tax base Temporary differences $000 $000 115 155 210 124 (120) Not applicable Required: (1) How much Temporary difference? (2) How much goodwill without considering deferred tax liability? (3) How much deferred liability arising on fair value exercise? (4) How much goodwill if considering deferred tax liability? 50 (30) " 135

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1 How much Temporary difference ANS WER Tem porary differences amount to 135 000 WORK ING Property p... View the full answer