Jastoon Co

Multiple Choice

Jastoon Co.acquired all of Wedner Co.for $588,000 cash in a tax-free transaction.On that date, the subsidiary had net assets with a $560,000 fair value but a $420,000 book value and income tax basis.The income tax rate was 30%.What amount of goodwill should have been recognized on the date of the acquisition?

A) $ 70,000.
B) $ 28,000.
C) $ (14,000) .
D) $ 19,600.
E) $ 65,000.