Horse Corporation acquires all of Pony, Inc. for $300,000 cash. On that date, Pony has net assets with fair value of $250,000 but a book value and tax basis of $200,000. The tax rate is 40 percent. Prior to this date, neither Horse nor Pony has reported any deferred income tax assets or liabilities. Required: What amount of goodwill should be recognized on the date of the acquisition?
Horse Corporation acquires all of Pony, Inc. for $300,000 cash. On that date, Pony has net assets with fair value of $250,000 but a book value and tax basis of $200,000. The tax rate is 40 percent. Prior to this date, neither Horse nor Pony has reported any deferred income tax assets or liabilities. Required: What amount of goodwill should be recognized on the date of the acquisition?
Chapter9: Acquisitions Of Property
Section: Chapter Questions
Problem 44P
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Horse Corporation acquires all of Pony, Inc. Please solve these accounting problem
Transcribed Image Text:Horse Corporation acquires all of Pony, Inc. for $300,000 cash. On that date,
Pony has net assets with fair value of $250,000 but a book value and tax basis
of $200,000. The tax rate is 40 percent. Prior to this date, neither Horse nor
Pony has reported any deferred income tax assets or liabilities.
Required:
What amount of goodwill should be recognized on the date of the acquisition?
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