On 1/1/20X2, Zorro Riders Company bought Inquisition Company for $60,000,000 in a business combination accounted for under the acquisition method. Goodwill was not involved. The tax basis of the net assets is $240,000,000. Therefore, deductible temporary differences equal $180,000,000. The tax rate is 21%. It has been determined that a valuation allowance for the entire amount of the deferred tax asset is required. However, at year-end 20X3, it is determined that the valuation allowance account is no longer needed. Show Income results for 20X2 and 20X3.

Answer rating: 100% (QA)

Particulars 20x2 20x3 Profit Before Tax XXXXX XXXXX Less Tax Expense XXXX XXXX Add Less Deferred ... View the full answer