Exercise 3-11A Profeet Company purchased the Starless Company in a nontaxable combination consummate

 
   

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Exercise 3-11A Profeet Company purchased the Starless Company in a nontaxable combination consummated as a stock acquisition. Profeet issued 9,500 shares of $5 par value common stock, with a market value of $72, in exchange for all the stock of Starless. The following information about Starless Company is available on the combination date. Starless Company $550,800 Book value of net assets Deferred tax liability from using Modified Accelerated Cost Recover System (MACRS) depreciation for tax purposes 24,260 Other Items Fixed assets Long-term debt The current and future tax rate is expected to be 40%. Book Value $442,670 53,600 Fair Value $529,110 470,300 Prepare the journal entry to record the acquisition, taking into account tax effects. (If no entry is required, select “No Entry” for the account titles and enter o for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Click if you would like to show Work for this question: Open Show Work