On January 1, 2XX1, Bald Eagle Corporation purchased 100% of the common stock Ohio Enterprises for $1,800,000. This transaction is a "nontaxable" acquisition under the Internal Revenue Code. On the date of acquisition, Ohio had common stock of $600,000 and retained earnings of $840,000. The fair values of Ohio's net assets equal their respective book values except for equipment that is undervalued by $90,000 and an unrecorded brand name valued at $135,000. Assume that the tax bases of Ohio's pre-acquisition identifiable net assets equal their book values. Bald Eagle's tax effective tax rate is 30%. What is the amount of goodwill recorded in connection with this combination? Select one: O a. $135,000 O b. $202,500 O c. $67,500 O d. 5-0-
On January 1, 2XX1, Bald Eagle Corporation purchased 100% of the common stock Ohio Enterprises for $1,800,000. This transaction is a "nontaxable" acquisition under the Internal Revenue Code. On the date of acquisition, Ohio had common stock of $600,000 and retained earnings of $840,000. The fair values of Ohio's net assets equal their respective book values except for equipment that is undervalued by $90,000 and an unrecorded brand name valued at $135,000. Assume that the tax bases of Ohio's pre-acquisition identifiable net assets equal their book values. Bald Eagle's tax effective tax rate is 30%. What is the amount of goodwill recorded in connection with this combination? Select one: O a. $135,000 O b. $202,500 O c. $67,500 O d. 5-0-
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter12: Intangibles
Section: Chapter Questions
Problem 18E
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![On January 1, 2XX1, Bald Eagle Corporation purchased 100% of the common stock Ohio Enterprises for $1,800,000. This transaction is a "nontaxable" acquisition under the Internal Revenue Code. On the date of
acquisition, Ohio had common stock of $600,000 and retained earnings of $840,000. The fair values of Ohio's net assets equal their respective book values except for equipment that is undervalued by $90,000
and an unrecorded brand name valued at $135,000. Assume that the tax bases of Ohio's pre-acquisition identifiable net assets equal their book values. Bald Eagle's tax effective tax rate is 30%.
What is the amount of goodwill recorded in connection with this combination?
Select one:
O a. $135,000
O
b. $202,500
O
c. $67,500
d. $-0-](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Faa2b1ea2-d3d7-4735-8e0c-4c5f690a8909%2Fe74d5cf9-152f-4e91-85d5-e6d820a38fe6%2F2331598_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On January 1, 2XX1, Bald Eagle Corporation purchased 100% of the common stock Ohio Enterprises for $1,800,000. This transaction is a "nontaxable" acquisition under the Internal Revenue Code. On the date of
acquisition, Ohio had common stock of $600,000 and retained earnings of $840,000. The fair values of Ohio's net assets equal their respective book values except for equipment that is undervalued by $90,000
and an unrecorded brand name valued at $135,000. Assume that the tax bases of Ohio's pre-acquisition identifiable net assets equal their book values. Bald Eagle's tax effective tax rate is 30%.
What is the amount of goodwill recorded in connection with this combination?
Select one:
O a. $135,000
O
b. $202,500
O
c. $67,500
d. $-0-
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