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Peace Corporation acquired 100 percent of Soft Inc. in a nontaxable transaction on December 31,201. The following balance sheet information is available immediately following the transaction: Additionol Informetion 1. The current and future effective tax rate for both Peace and Soft is 40 percent. 2. The recorded deferred tax asset for Peace relates to the book-tax differences arising from the allowance for doubtful Accounts and the Accrued vacation payable. The expenses associated with each of these amounts will not be deductible for tax purposes until the related accounts receivable are written off or until the employee vacation is actually paid out. 3. The recorded deferred tax asset for Soft is related solely to the book-tax difference arising from the allowance for doubtful accounts. 4. The recorded deferred tax liability in both Peace and Soft relates solely to the book-tax differences arising from the depreciation of their respective equipment. 5. Accumulated depreciation on the financial accounting records of Peace and Soft is $45,000 and $18,000, respectively. 6. The Soft patent was identified by Peace in the due diligence process and has not previously been recorded in the accounting records of Soft. 7. The book and tax bases of all other assets and liabilities of Peace and Soft are the same. Required: a. Compute the tax bases of the assets and liabilities for Peace and Soft, where different from the amounts recorded in the respective accounting records. b. Compute the fair value of the deferred tax assets and deferred tax liabilities for Soft. c. Prepare all of the consolidation entries needed to prepare the worksheet for Peace and Soft at the date of acquisition. (If no entry Is requlred for e trensection/event, select "No journel entry required" In the flrst eccount fleld.) Consolidation Worksheet Entries Record the basic consolidation entry. Note: Enter debits before credits. d. Prepare the consolidation worksheet for Peace and Soft at the date of acquisition. (Values In the flrst two columns (the "parent" and "subsidlery" belances) thet are to be deducted should be indleated with a minus sign, while all values In the "Consolledetion Entrles" columns should be entered as positive values. For accounts where multiple adjusting entrles are requlred, combine all deblt entrles Into one amount and enter thls amount In the debit column of the worksheet. Slmillarly, comblne all credit entries Into one omount and enter thls omount In the credit column of the worksheet.)

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