14.Liliw Company engaged your services to compute the goodwill in the purchase of Calauan Company which provided the following: Net income Net assets 1,400,000 1,600,000 2,000,000 2002 6,000,000 8,000,000 8,800,000 2003 2004 2005 2,200,000 9,200,000 It is agreed that goodwill is measured by capitalizing excess earnings at 20% with normal return on average net assets at 10%. How much is the purchase price for Calauan Company? a. P14,200,000 b. P18.200.000 c. P13,000,000 d. P17.000.000
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- Naughty Company assembles the following data relative to a certain entity in determining the amount to be paid for net assets and goodwill: Assets at fair value before goodwill 2, 600, 000Liabilities 900, 000Shareholders’ equity 1, 700, 000 Net earnings after elimination of unusual or infrequent items:2008 200, 0002009 230, 0002010 300, 0002011 250, 0002012 270, 000 Required: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 fair value. Excess earnings are capitalized at 15%.3. A return of 10% is considered normal on net assets at fair value. Goodwill is measured at 5 years excess earnings.4. A return of 10% is considered normal on net assets at fair value. Excess earnings are expected to…13. Karen Company engaged your services to compute for the goodwill in the purchase of another entity which provided the following: Year Net Income Net Assets 2016 Php 1,000,000 Php 3,900,000 2017 Php 1,250,000 Php 4,350,000 2018 Php 1,950,000 Php 4,500,000 Goodwill is measured by capitalizing excess earnings at 25% with normal return on average net assets at 20%. How much is the purchase price?England Company assembled the following data relative to o certain entity in determining the amount to be paid for net assets and goodwill: 2,600,000 Assets at fair value before goodwill Liabilities 1,700,000 Shareholders' equity Net earnings after elimination of unusual or infrequent items: 200,000 230,000 300,000 250,000 270,000 2018 2019 thucms 2020 2021 Required: 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 far value. Excess earnings are capitalized at 15%. 3. A return of 10% is considered normal on net assets at fau value. Goodwill is measured at 5 years excess earnings. Goodwill is measured by the present value method using 12% rate. The present value of an ordinary annuity of 12% for 10 years is 5.65.
- If the company's assets in TL: cash 100.000, accounts receivable 50.000, inventory 150.000, and building 200.000 (market value 300.000) and the liabilities 300.000. If the price paid to acquire company 400.000 TL, how much is the goodwill under market value approach? Select one: a. 100.000 b. 300.000 c. 200.000 d. 150.0005. During the current year an entity sold a piece of equipment used in production. The equipment had been accounted for using the revaluation method and details of the accounts and sale are presented below: Sales price P100,000 Equipment carrying amount (net) 90,000 Revaluation surplus 20,000 Which of the following is correct regarding recording the sale? Group of answer choices The gain that should be recorded in other comprehensive income is P10,000 The gain that should be recorded in profit and loss is P10,000; the P20,000 revaluation surplus may be transferred to retained earnings. The gain that should be recorded in other comprehensive income is P30,000 The gain that should be recorded in profit and loss is P30,000Compute the amount of acquired Goodwill, including contingent earnings and bargain purchase Assume that you are charged with assigning fair values related to a $3,800,000 acquisition. You determine that the fair value of the net identifiable tangible assets is $1,850,000. You also conclude that the purchase included a Customer List with a fair value at $340,000. a. How much Goodwill will you record in this acquisition? $ 1,610,000 ✓ b. Continuing from part (a), now also assume that the purchase and sale agreement requires the payment of an additional $925,000 if the subsidiary achieves a certain level of earnings. You estimate the fair value of that contingent earnings clause in the agreement to be $220,000. How does this additional information affect your computation of Goodwill? The amount of Goodwill recorded is $ 1,830,000 c. This part of the exercise is independent parts (a) and (b). Assume that the purchase price is $3,800,000 and that fair value of the net identifiable tangible…
- The partners of the Liwa Engineering Company have decided to terminate the business. The balances of the company's accounts prior to the liquidation are given in the Table 1. Table 1 Book value in OMR Cash 28,500 Plant assets (net) 75,000 Machinery and equipment (net) 2,500 Inventories 1,300 Liabilities 47,300 Capital, Partner 1 36,000 Capital, Partner 2 24,000 Additional information: The partner 1 and the partner 2 share profits and losses in the ratio 7:3. In the process of liquidation, the non-cash assets are sold for OMR 125,000. Required: A. You are asked to prepare a schedule of cash payments (Table 2), showing how cash will be distributed between the partners as it becomes available. B. Based on the information above (Table 2 – Schedule of Cash Payments), journalize the transactions.Analyze the influence of return on sales and asset turnover on the return on assets (ROA). Use absolute differences method. Year 200A Year 200B Sales, S'000 Profit, S'000 45612 46418 12116 12813 Assets, $'000 32745 33186Narnia company have the following data relative to a certain entity in determining the amount to be paid for net assets and goodwill: Assets at fair value before goodwill 3,900,000 Liabilities 1,350,000 Shareholders’ equity 2,550,000 Average earnings for five years amounted to 375,000 and a return of 8% on net assets is considered normal. Compute the goodwill if excess earnings is capitalized at 15%.
- MinMin Co. assembled the following data relative to a certain entity in determining the amount to be paid for net assets and goodwill: Identifiable assets at fair value P 2,600,000 Liabilities at fair value 900,000 Net assets at fair value 1,700,000 Earnings over the previous 5 years were as follows: 150,000 180,000 250,000 200,000 220,000 2017 2018 2019 2020 2021 Additional information • Key management bonus over the previous 5 years amounted to P200,000 • Loss on sale of equipment amount to 50,000 • A return of 10% is considered normal on net assets at fair value. Calculate the amount of goodwill under the following: 1. Average earnings capitalized at 10% 2. How much is the correct cost of the trademark? 4)Topic: Intangible Assets (Goodwill) England Company assembled the following data relative to a certain entity in determining the amount to be paid for net assets and goodwill: Assets at fair value before goodwill 2,600,000 Liabilities 900,000 Shareholders' Equity 1,700,000 Net Earnings after elimination of unusual or infrequent items: 2017 200,000 2018 230,000 2019 300,000 2020 250,000 2021 270,000 Required: 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 fair value. Excess earnings are capitalized at 15%. 3. A return of 10% is considered normal on net assets at fair value. Goodwill is measured at 5 years excess earnings. 4. A return of 10% is considered…16. ABC Co.'s biological asset has a fair value less costs to sell of P 100,000 and P120,000, respectively. The year-end adjusting entry will most likely include a. a credit to unrealized gain of P 20,000 to be recognized in profit or loss b. a credit to unrealized gain of P 20, 000 to be recognized in other comprehensive income c. a debit to unrealized gain of P 20,000 to be recognized in profit or loss d. none of these