Hastoon Company purchases all of Zedner Company for $420,000 in cash. On that date, the subsidiary has net assets with a $400,000 fair value but a $300,000 book value and tax basis. The tax rate is 30 percent. Neither company has reported any deferred income tax assets or liabilities. What amount of goodwill should be recognized on the date of the acquisition?
a. $20,000.
b. $36,000.
c. $50,000.
d. $120,000.
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