FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:On July 1 of year 1, Riverside Corporation (RC), a calendar-year taxpayer, acquired the assets of another business in a taxable
acquisition. When the purchase price was allocated to the assets purchased, RC determined it had purchased $1,620,000 of goodwill
for both book and tax purposes. At the end of year 1, RC determined that the goodwill had not been impaired during the year. In year
2, however, RC concluded that $635,000 of the goodwill had been impaired and wrote down the goodwill by $635,000 for book
purposes.
Required:
a. What book-tax difference associated with its goodwill should RC report in year 1? Is it favorable or unfavorable? Is it permanent or
temporary?
b. What book-tax difference associated with its goodwill should RC report in year 2? Is it favorable or unfavorable? Is it permanent or
temporary?
Complete this question by entering your answers in the tabs below.
Required A Required B
What book-tax difference associated with its goodwill should RC report in year 1? Is it favorable or unfavorable? Is it
permanent or temporary?
Note: Do not round intermediate computations.
Book-tax difference
Is it favorable or unfavorable?
Is it permanent or temporary?
Transcribed Image Text:On July 1 of year 1, Riverside Corporation (RC), a calendar-year taxpayer, acquired the assets of another business in a taxable
acquisition. When the purchase price was allocated to the assets purchased, RC determined it had purchased $1,620,000 of goodwill
for both book and tax purposes. At the end of year 1, RC determined that the goodwill had not been impaired during the year. In year
2, however, RC concluded that $635,000 of the goodwill had been impaired and wrote down the goodwill by $635,000 for book
purposes.
Required:
a. What book-tax difference associated with its goodwill should RC report in year 1? Is it favorable or unfavorable? Is it permanent or
temporary?
b. What book-tax difference associated with its goodwill should RC report in year 2? Is it favorable or unfavorable? Is it permanent or
temporary?
Complete this question by entering your answers in the tabs below.
Required A Required B
What book-tax difference associated with its goodwill should RC report in year 2? Is it favorable or unfavorable? Is it
permanent or temporary?
Note: Do not round intermediate computations.
Book-tax difference
Is it favorable or unfavorable?
Is it permanent or temporary?
< Required A
Required >
Show less A
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