Vibe Company Purchased the Net Assets of Atlantic Company in a Business

question 19

Multiple Choice

Vibe Company purchased the net assets of Atlantic Company in a business combination accounted for as a purchase. As a result, goodwill was recorded. For tax purposes, this combination was considered to be a tax-free merger. Included in the assets is a building with an appraised value of $210,000 on the date of the business combination. This asset had a net book value of $70,000, based on the use of accelerated depreciation for accounting purposes. The building had an adjusted tax basis to Atlantic (and to Vibe as a result of the merger) of $120,000. Assuming a 36% income tax rate, at what amount should Vibe record this building on its books after the purchase?

• A) $120,000
• B) $134,400
• C) $140,000
• D) $210,000

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Definitions:

Co-occurring SUD

The simultaneous presence of Substance Use Disorder and another mental health disorder in an individual, requiring integrated treatment approaches.

Psychiatric Disorder(s)

Mental health conditions characterized by alterations in thinking, mood, or behavior, which result in distress and impaired functioning.

Reciprocal Causation Model

A theory that emphasizes the interactive influences between individuals and their environment, often used in psychology and education.

Impaired Control

A condition where an individual finds it difficult to regulate their behavior or consumption, often seen in the context of substance abuse and addictive behaviors.