[stevemiller]

Sign Company purchased the net assets of Post 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 Sign record this building on its books after the purchase?

a. $120,000
b. $134,400
c. $140,000
d. $210,000

From what I can tell, I think the asset should be recorded at fair value on the books after purchase for the parent company. So, I think the answer is D. Does anyone have any insight on this?

[stevemiller]

I've been reading around and still haven't found any information that would make me think my previous comment was not right. I"d really appreciate some input though.