Included in the identifiable net assets of Sapphire Company on the date of its business combination with Palumbo Corporation was a building with an appraised value of $900,000 and a carrying amount of $600,000. If the Palumbo-Sapphire business combination met the requirements of a "tax-free corporate reorganization" for income tax purposes and the income tax rate was 40%, the current fair value of Sapphire's building for inclusion in the consolidated financial statements of Palumbo Corporation and subsidiary is:

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The correct answer is D) $900,000. In a business combination, assets are typically recorded at their fair value at the date of acquisition in the consolidated financial statements. The tax implications of the transaction do not affect the recording of the asset's fair value in the consolidated financial statements. Therefore, the building's current fair value of $900,000 is the amount to be included in the consolidated financial statements of Palumbo Corporation and its subsidiary.

Included in the Identifiable Net Assets of Sapphire Company on the Date