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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 $1,962,000 of go 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 2, however, RC concluded that $500,000 of the goodwill had been impaired and wrote down the goodwill by $500,000 for boa purposes. Required: a. What book-tax difference associated with its goodwill should RC report in year 1? Is it favorable or unfavorable? Is it permane. temporary? b. What book-tax difference associated with its goodwill should RC report in year 2? Is it favorable or unfavorable? Is it permane temporary?

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 $1,962,000 of go 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 2, however, RC concluded that $500,000 of the goodwill had been impaired and wrote down the goodwill by $500,000 for boa purposes. Required: a. What book-tax difference associated with its goodwill should RC report in year 1? Is it favorable or unfavorable? Is it permane. temporary? b. What book-tax difference associated with its goodwill should RC report in year 2? Is it favorable or unfavorable? Is it permane temporary?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 16-39 (LO 16-2) (Algo) 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 $1,962,000 of go 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 2, however, RC concluded that $500,000 of the goodwill had been impaired and wrote down the goodwill by $500,000 for boo purposes. Required: a. What book-tax difference associated with its goodwill should RC report in year 1? Is it favorable or unfavorable? Is it permane temporary? b. What book-tax difference associated with its goodwill should RC report in year 2? Is it favorable or unfavorable? Is it permane 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? Unfavorable Temporary < Required A 0 Renginud t Show less
Transcribed Image Text:Problem 16-39 (LO 16-2) (Algo) 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 $1,962,000 of go 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 2, however, RC concluded that $500,000 of the goodwill had been impaired and wrote down the goodwill by $500,000 for boo purposes. Required: a. What book-tax difference associated with its goodwill should RC report in year 1? Is it favorable or unfavorable? Is it permane temporary? b. What book-tax difference associated with its goodwill should RC report in year 2? Is it favorable or unfavorable? Is it permane 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? Unfavorable Temporary < Required A 0 Renginud t Show less
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