Reference no: EM132576161

Question 1: On 1/1/20X2, Zorro Riders Company bought Inquisition Company for $60,000,000 in a business combination accounted for under the acquisition method. Goodwill was not involved. The tax basis of the net assets is $240,000,000. Therefore, deductible temporary differences equal $180,000,000. The tax rate is 21%. It has been determined that a valuation allowance for the entire amount of the deferred tax asset is required. However, at year- end 20X3, it is determined that the valuation allowance account is no longer needed. Show Income results for 20X2 and 20X3