Advanced Accounting (Canada) · Deferred Taxes in Business Combinations

A deferred tax balance is being computed. What is the single comparison that defines a temporary difference, and why does that comparison (not the income-statement difference) drive the deferred tax?

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More in Deferred Taxes in Business Combinations

At acquisition you fair-value the acquiree's identifiable assets, but you do not adjust their tax bases. What does this mismatch force you to recognize, and why can't you just carry over the acquiree's old deferred taxes?

You fair-value an acquiree's PP&E upward, creating a taxable temporary difference. Which way does the resulting deferred tax move identifiable net assets, and what does that do to goodwill?

When does an asset's tax base equal its carrying amount so that no temporary difference exists, even if book and tax numbers were derived differently?

You find an asset whose carrying amount is less than its tax base. Is the resulting deferred tax an asset or a liability, and what distinguishes this from the opposite case?

An acquiree brings sizeable operating loss carry-forwards into the combination. How much of a deferred tax asset do you recognize at the acquisition date, and what does recognizing it do to goodwill?

An acquired tax loss carry-forward was not recognized at acquisition because realization was not probable. A year later realization becomes probable. Where does the deferred tax asset get recognized?

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