Sim Company purchased the net assets of Express Company in a business combination accounted for as a purchase. As a result, goodwill was recorded. For tax purposes, this combination was considered to be a tax-free merger. Included in the assets is a building with an appraised value of $210,000 on the date of the business combination. This asset had a net book value of $70,000, based on the use of accelerated depreciation for accounting purposes. The building had an adjusted tax basis to Express (and to Sim as a result of the merger) of $120,000. Assuming a 36% income tax rate, at what amount should Sim record this building on its books after the purchase?
a. $120,000
b. $134,400
c. $140,000
d. $210,000
For anyone that can help with this problem, I'd appreciate n explanation if it can be given.
a. $120,000
b. $134,400
c. $140,000
d. $210,000
For anyone that can help with this problem, I'd appreciate n explanation if it can be given.