ABC Inc Has Acquired All of the Voting Shares of DEF

Essay

ABC Inc. has acquired all of the voting shares of DEF Inc and is gathering the necessary data to prepare consolidated financial statements. ABC paid $1,200,000 for its investment. Details of the companies' assets and liabilities on the acquisition date are shown below:
$\begin{array}{|l|r|r|}\hline & \text { Fair Market Value } & \text { Tax Basis } \\\hline \text { Inventory } & \$ 80,000 & \$ 80,000 \\\hline \text { Accounts Receivable } & \$ 100,000 & \$- \\\hline \text { Land } & \$ 200,000 & \$ 200,000 \\\hline \text { Buildings } & \$ 300,000 & \$ 200,000 \\\hline \text { Equipment } & \$ 250,00 d & \$ 200,000 \\\hline \text { Accounts Payable } & \$ 70,000 & \$ 70,000 \\\hline\end{array}$ Required:
Assuming that DEF hasn't set up Deferred Tax Asset or Liability accounts, determine the amounts that would be used to prepare the Consolidated Balance Sheet on the acquisition date. Assume a tax rate of 50%.