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Advanced Accounting 11th Edition by Paul Fischer,William Tayler, Rita Cheng
Edition 11ISBN: 978-0538480284Advanced Accounting 11th Edition by Paul Fischer,William Tayler, Rita Cheng
Edition 11ISBN: 978-0538480284 Exercise 22
D D for nontaxable exchange with tax loss carryforward. Palto issues 20,000 of its $5 par value common stock shares, with a fair value of $35 each, for a 100% interest in Sword Company on January 1, 2011. The balance sheet of Sword Company on that date is as follows: 
Total assets............... $400,000 Total liabilities and equity...... $400,000
On the purchase date, the buildings and equipment are understated $50,000 and have a remaining life of 10 years. Sword has tax loss carryovers of $200,000. They are believed to be fully realizable at a tax rate of 30%. $40,000 of the tax loss carryovers will be utilized in 2011. The purchase is a tax-free exchange. The tax rate applicable to all transactions is 30%. Any remaining excess is attributed to goodwill.
Prepare a value analysis and a determination and distribution of excess schedule for this investment.
Total assets............... $400,000 Total liabilities and equity...... $400,000
On the purchase date, the buildings and equipment are understated $50,000 and have a remaining life of 10 years. Sword has tax loss carryovers of $200,000. They are believed to be fully realizable at a tax rate of 30%. $40,000 of the tax loss carryovers will be utilized in 2011. The purchase is a tax-free exchange. The tax rate applicable to all transactions is 30%. Any remaining excess is attributed to goodwill.
Prepare a value analysis and a determination and distribution of excess schedule for this investment.
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Determination and Distribution of Excess...
Advanced Accounting 11th Edition by Paul Fischer,William Tayler, Rita Cheng
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