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3 years ago

The following happened in a recent M&A transaction:

Business

1 answer:

MAVERICK [17]3 years ago

3 0

Answer: D. A deferred tax asset equal to $52.5 million

Explanation:

Original book basis of PP&E = $650 million

Fair market value = $800 million

Then, we calculate the difference between the fair market value and the original book value which will be:

= $800 million - $650 million

= $150 million

Then, the deferred tax liabilities will be:

= 35% × $150 million

= $ 52.5 million

Therefore, assuming a corporate tax rate of 35% for book purposes, the company should record a deferred tax asset equal to $52.5 million.

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Answer:

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Cr Cash $20,600,000

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Cr Note Receivable $20,600,000

Cr Interest Income receivable $515,000

( to record the repayment of the principal and interest income, in which 5 months of interest income had already been recorded in 2021, the other 1 month of interest income $103,000 (20.6 million x 6%/12) is recorded at the end of January which is also maturity time.

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Has both a private life and a public life

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