Lakecraft Company has the following balance sheet on December 31, 2011, when it is acquired for $950,000 in cash by Argo Corporation:All assets have fair values equal to their book values. The...

Lakecraft Company has the following balance sheet on December 31, 2011, when it is acquired for $950,000 in cash by Argo Corporation: All assets have fair values equal to their book values. The combination is structured as a tax-free exchange. Lakecraft Company has a tax loss carryforward of $300,000, which it has not recorded. The balance of the $300,000 tax loss carryover is considered fully realizable. Argo is taxed at a rate of 30%. Record the acquisition of Lakecraft Company by Argo Corporation. View Solution:

Lakecraft Company has the following balance sheet on December 31