England Company assembled the following data relative to ocertain entity in determining the amount to be paid for netassets and goodwill:2,600,000Assets at fair value before goodwillLiabilities1,700,000Shareholders' equityNet earnings after elimination of unusual or infrequent items:200,000230,000300,000250,000270,00020182019thucms20202021Required:Calculate the amount of goodwill under the following:1. Average earnings are capitalized at 10%.2. A return of 8% is considered normal on net assets at farvalue. Excess earnings are capitalized at 15%.3. A return of 10% is considered normal on net assets at fauvalue. Goodwill is measured at 5 years excess earnings.Goodwill is measured by the present value method using12% rate. The present value of an ordinary annuity of12% for 10 years is 5.65.

The question is based on the concept of Financial Accounting. As per the Bartelby guidelines we are…

England Company assembled the following data relative to a certain entity in determining the amount to be paid for net assets and goodwill: 2,600,000 Assets at fair value before goodwill Liabilities 900,000 Shareholders' equity 1,700,000 Net earnings after elimination of unusual or infrequent items:

England Company assembled the following data relative to a certain entity in determining the amount to be paid for net assets and goodwill: 2,600,000 Assets at fair value before goodwill Liabilities 900,000 Shareholders' equity 1,700,000 Net earnings after elimination of unusual or infrequent items:

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 9MC

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