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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 $965,000 for Oxford, which has the following accounts: Fair Value Tax Basis Accounts receivable $ 170,000 $ 170,000 Inventory 151,000 151,000 Land 199,000 199,000 Buildings 201,500 147,000 Equipment 255,750 192,000 Liabilities (289,000 ) (289,000 ) What amount of deferred tax liability arises in the acquisition

Respuesta :

Answer:

$35,475

Explanation:

The computation of amount of deferred tax liability is shown below:-

                        Fair Value     Tax Basis          Difference

Buildings        $201,500         $147,000           $54,500

Equipment        $255,750         $192,000     $63,750

                                                                                   $118,250

Deferred Tax Liability = × Difference of Building and equipment

= 30% × 118,250

= $35,475

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