On acquiring Morliandre, the Taldrix group recognises: inventories at their fair value of 1,300,000 (tax base 1,000,000); patents at 1,100,000 (nil tax base); a litigation liability assumed of 200,000, tax deductible when paid (nil tax base). The group's future taxable profits allow the deductible difference to be used. Tax rate: 30%. Compute the deferred tax liability and asset arising from the combination.
- Fair value of inventories
- 1,300,000
- Tax base of inventories
- 1,000,000
- Fair value of patents
- 1,100,000
- Litigation liability assumed
- 200,000
- Tax rate (%)
- 30 %