Assume zero tax rate. ABC, Inc. acquired 100% of the assets of DEF Corporation for $15,000,000...
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Assume zero tax rate. ABC, Inc. acquired 100% of the assets of DEF Corporation for $15,000,000 immediately prior to close of business on 12/31/19 when the book value and fair value of net assets of DEF was $20,000,000 (no differences).
For the entire year ended 12/31/19, DEF reported net income of $6,000,000. As a result of doing the acquisition on 12/31/19, the following is the impact on the total consolidated pretax income of ABC for the year ended 2019:
a. Zero impact as the acquisition was made on the last day of the year
b. $500,000 increase in income
c. $500,000 decrease in income
d. $5,000,000 increase in income
e. None of the above
Homework Answers
ABC, Inc. acquired 100% of the assets of DEF Corporation for $15,000,000 immediately prior to close of business on 12/31/19. the book value and fair value of net assets of DEF was $20,000,000.
Thus there will be a $500,000 increase in income.
For the entire year ended 12/31/19, DEF reported net income of $6,000,000. As a result of doing the acquisition on 12/31/19, the impact on the total consolidated pretax income of ABC for the year ended 2019 is $500,000 increase in income
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