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

question 22

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.The building had an adjusted tax basis to Atlantic (and to Vibe as a result of the merger) of $120,000.Assuming a 40% income tax rate, at what amount should Vibe record this building on its books after the purchase?
$\begin{array}{lc} & \text { Deferred Tax } \\ \text { Building } & \text { Liability }\end{array}$

• A)?$174,000\(\quad \)\(\quad \)\(\quad \)\(\quad \) $ 0
• B)?$140,000 \(\quad \)\(\quad \)\(\quad \)\(\quad \)$36,000
• C)?$210,000 \(\quad \)\(\quad \)\(\quad \)\(\quad \)$90,000
• D)?$210,000 \(\quad \)\(\quad \)\(\quad \)\(\quad \)$36,000

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Definitions:

Unconditioned Response

An automatic, natural reaction to an unconditioned stimulus, not learned through prior experience or conditioning.

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A type of kiss characterized by intense emotional and physical connection between individuals, often signaling deep affection or romantic desire.

Conditioned Stimulus

A previously neutral stimulus that, after being paired with an unconditioned stimulus, evokes a conditioned response.

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The process of becoming markedly red in the face and often other areas of the skin, typically as a result of strong emotions, heat, alcohol consumption, or certain medical conditions.