Foster Ltd

question 2

Multiple Choice

Foster Ltd. acquired 100% of Benson Ltd. The carrying values of Benson's capital assets differed from their fair values and their fair values differed from their tax bases. Which of the following statements is true?

• A)The difference between Benson's carrying values and its fair values created a deferred tax asset or liability that is part of the allocation of the acquisition cost.
• B)The difference between Benson's fair values and its adjusted cost bases for tax purposes creates a deferred tax asset or liability that is part of the allocation of the acquisition cost.
• C)The difference between Benson's carrying values and its adjusted cost bases for tax purposes created a deferred tax asset or liability that is part of the allocation of the acquisition cost.
• D)No deferred tax asset or liability arises from the above situation.

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Definitions:

Comparative Negligence

A legal doctrine used in tort law that reduces the amount of damages a plaintiff can recover based on the percentage of fault attributed to them.

Assumption of Risk

A legal defense in tort law where a person voluntarily exposes themselves to a known risk, potentially limiting their right to claim damages.

Plaintiff's Knowledge

The awareness that a plaintiff has or is expected to have about the facts and circumstances central to their legal claim or case.

Traditional Negligence Defenses

Defenses used in legal claims for negligence, including contributory negligence, comparative negligence, assumption of risk, and immunity, among others.