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Question: King’s Road recently acquired all of


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 $850,000 for Oxford, which has the following accounts:



King’s Road recently acquired all of Oxford Corporation’s stock and is now -1

a. What amount of deferred tax liability arises in the acquisition?
b. What amounts will be used to consolidate Oxford with King’s Road at the date of acquisition?
c. On a consolidated balance sheet prepared immediately after this takeover, how much goodwill should King’s Road recognize? Assume a 21 percent effective tax rate.

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