4. Magsano Company is planning to sell the business to new interests. The accumulative net earnings for the past five years amounted to P9,500,000. The normal rate is 20%. The fair value of net assets of the entity at the current year-end was $7,000,000. What is the amount of goodwill if excess earnings are purchased for 5 years? a. 7,000,000 b. P 2,050,000 c. P 2,000,000 d. P 1,000,000
Q: 5.The amount computed under the percentage of credit sales method is the bad debts expense for…
A: Every business runs for the purpose of generating sales and profit. Sales revenue means amount of…
Q: with examples. Balance Sheet of Sinaco Limited is given as follows: June 30 Head of Account Year…
A: Decrease in fixed asset is because of depreciation. Net income is 25000 so increase in retained…
Q: Since the use of leverage can benefit a fum when times are good, a high degree of leverage is…
A: Leverage is the use of debt in order to undertake in investment or project. Leverage is a amount of…
Q: 27.The individual customer accounts of ABC Company at June 30, 20X1 revealed the following data:…
A: Allowance for doubtful accounts means where we expect some debts to become bad in near future then…
Q: The owner of the business wants to know the operations of the business. You are tasked to compute…
A: Accrual basis and cash basis are two important base of accounting. Under accrual basis, net income…
Q: Net fixed assets" 403,000 Land 49,440 49,600 Total assets 618,000 620,000 30,900 24,800 Notes…
A: Cash flows statement is one of the financial statement for the business. This shows all cash inflows…
Q: Instructions Instructions Chart of Accounts Journal Adele Corp., a wholesaler of music equipment,…
A:
Q: The following information applies to the questions displayed below.]
A:
Q: Presented below is the list of inventory items of ABC Corp at Dec 31, 20X1: a. Goods sold on…
A: Under FOB destination, titles of goods are transferred to the buyer only when goods are delivered to…
Q: A bank statement received by Allied Ltd for the month of February 2022 showed a credit balance of…
A: Introduction: BRS: BRS stands for Bank Reconciliation statement. To reconcile the differences…
Q: Accounts payable $31,408 Accounts receivable 70,295 Accrued liabilities 6,601 Cash 20,361 Intangible…
A: Working capital was an important liquidity measure for an firm. It can be found out by the…
Q: The following information relates to a joint production process for three products, with a total…
A: Hi There, Thanks for choosing Bartleby, as per the honor code we are supposed to give the answer of…
Q: 2) Troy Ltd purchased a new machine on 1 October 2016 at a cost of $114,000. The entity estimated…
A: Introduction: Depreciation: Decreasing value of fixed assets over its useful life period called as…
Q: performance of risk assessment procedures, Andoy, CPA, noted a change in accounting principle has…
A: Changes in accounting principle happen when there is more than one generally accepted accounting…
Q: The following information is available from the current period financial statements: Net income…
A: Introduction: The tasks of a business that are directly connected to supplying goods and/or services…
Q: Question. If given the following information: 2,073 Current Assets Current Liabilities. 1,634 Cash…
A: Introduction: The current ratio evaluates a company's ability to pay its bills in the short term. It…
Q: Following are several figures reported for Allister and Barone as of December 31, 2021:…
A: Customer list amortization = $78,000/4 years Customer list amortization = $19,500 per year…
Q: The following data pertain to an investment proposal (Ignore income taxes.): Cost of the…
A: Net present value is the value which is calculated by discounting the future cash inflows and then…
Q: A partnership of attorneys in the St. Louis, Missouri, area has the following balance sheet accounts…
A: A partnership is an agreement in which two or more people come tother intending to operate a…
Q: Presented below are transactions related to Concord Corporation. 1. 2. 3. (a) On December 3, Concord…
A: >Under perpetual inventory system, the Inventory account is updated after every purchase and…
Q: Oriole Corporation has 74,000 shares of common stock outstanding. It declares a $2 per share cash…
A: The process of recording business transactions in the books of accounts for the first time is…
Q: Alt Company purchased a new piece of manufacturing machinery on January 2, 2021. The machine had a…
A: Depreciation means the loss in value of assets because of usage of assets , passage of time or…
Q: 8. Kopi Company acquired all of the outstanding ordinary shares of an acquiree paying P9,000,000…
A: Excess of price over the fair value of net identifiable asset is called goodwill. Goodwill arises…
Q: The following information pertains to the inventory of Parvin Company for Year 3: Jan. 1 Beginning…
A: LIFO is the last in first out wherein the goods purchased at the end are to be sold first and FIFO…
Q: Mr Paul has worked in AAA Limited as an accountant for the last two years. He prepares journal…
A: Internal control refers to the process, rules which are implemented through company in order to…
Q: The following information is available from the current period financial statements: Net income…
A: Introduction: Operating activities are a company's daily activities that involve making and selling…
Q: PROBLEM SOLVING (MCQ) The TAGALOG CORPORATION purchases merchandise from a foreign exporter on…
A: Foreign exchange transactions are those transactions which are entered between two parties in…
Q: Sweeten Company had no jobs in progress at the beginning of March and no beginning inventories. The…
A: >Overheads are to be applied to the work in process or Jobs based on an overhead application…
Q: If a company constructs a laboratory building to be used as a research and development facility, the…
A: Introduction:- All costs pertaining to the construction or purchase of new buildings should be…
Q: Based on the following information, you are required to prepare the following: a) Adjusting entries…
A: Here given the details of the accounting of treasury stock and its effect in the equity statement as…
Q: ROBLEM 1. 4111 Company had the following items in its "Cash and cash equivalents" account as of…
A: Hi There, Thanks for choosing Bartleby. As per the Honor code we are supposed to answer the first…
Q: Design a salary slip for the month of March 2021 with information given below.
A: Given in the question: CTC = 20L = 2,000,000 Fixed Vs Variable Ratio = 70:30 HRA = 20% Basic = 50%…
Q: Cost of Goods Manufactured for a Manufacturing Company The following information is available for…
A: In management accounting, the phrase "cost of goods manufactured" relates to a schedule that…
Q: Question: David Austin recently purchased a chain of dry cleaners in northern Wisconsin. Although…
A: Introduction: The accounting breakeven point is the sales level at which a company produces exactly…
Q: In history's accounting practise, what function does an Accounting Information System play?
A: Accounting information system (AIS) is a collective mechanism wherein information or data related to…
Q: On April 5, purchased merchandise on account from Sheffield Company for $26,400, terms 4/10, net/30,…
A: A Journal entry is a primary entry that records the financial transactions initially. The…
Q: Karen Corporation has engaged Gelai, CPA, to issue a report on the accuracy of product quality…
A: Attestation Service: An engagement consisting of an examination, review, or application of…
Q: avid Austin recently purchased a chain of dry cleaners in northern Wisconsin. Although the business…
A: Introduction: The accounting breakeven point is the sales level at which a company produces exactly…
Q: Which of the following statements is correct? O a. A tax offset can result in a refund if it relates…
A: The tax means the amount that a taxpayer provides to the government. The government uses this amount…
Q: The annual accounting period ends December 31 Apr. 30 Received $465,000 from Commerce Bank after…
A: Accounting transactions will be recorded with the use of journal entries in the firm's books of…
Q: On 1 January 2020, Moon Co entered into a five-year lease of equipment which has a remaining useful…
A: Lease is a contractual agreement under which one party gives its asset to another party for using…
Q: Inc. Tive-year yielding effective interest rate of 12%. Semi annual interest is payable on June 30…
A: When the market rate of interest ( here 12%) is more than the stated rate of interest ( here 11%)…
Q: Activity 1 - Computing Net Income or Net Loss, Collectibles and Expenses Directions: Apply the basic…
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: Kansas Enterprises purchased equipment for $74,500 on January 1, 2021. The equipment is expected to…
A: Introduction: Depreciation: Decreasing value of fixed assets over its useful life period called as…
Q: Question 1 Au Farm Ltd leases a Tractor from Agrimachine Ltd that cost Agrimachine Ltd $ 80 000 to…
A: Here discuss about the details of the calculation of leases and its liability which are incurred in…
Q: Question. Hemingway Corporation has 100,000 shares of common stock issued and outstanding. At the…
A: Introduction: Common stocks are securities that reflect individuals' ownership in a firm as well as…
Q: REQUIRED: • PREPARE THE CORRECT INCOME STATEMENT • PREPARE THE CORRECT BALANCE SHEET
A: The income statement and the balance sheet are the part of the financial statement that depicts the…
Q: 4. Which of the following costs would not be capitalized? a. Acquisition cost of equipment to be…
A: Meaning : Intangible Assets An intangible assets is an identifiable non-monetary asset without…
Q: Net Sales Less Cost sales (cost of \ Good old Grocs Income (profit) Less operating Expense Selling…
A: Return on assets means the amount of return earned by an entity using its assets.
Q: D.cost of living adjustment
A: The provision of cost of living adjustment is included in group disability income contracts but not…
Step by step
Solved in 2 steps
- Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of zero. Bliss uses the straight -line method of depreciation. At the beginning of the sixth year, the assets book value is 200,000 and Bliss changes the estimate of the assets life to 25 years, so that 20 years now remain in the assets life. Explain how this change will be accounted for in Blisss financial statements, and compute the current and future annual depreciation expense.An entity is planning to sell the business to new interests. The cumulative net earnings for the past five years amounted to P16,500,000 including expropriation loss of P1,500,000. The normal rate of return is 20%. The fair value of net assets of the entity at current year end was P10,000,000. 1. What is the purchase price if goodwill is measured by capitalizing excess earnings at 25%?2. What is the purchase price if goodwill is measured by capitalizing average annual earnings at 25%?Meryll Company is negotiating to acquire the net assets LeMans Company. Under the plan, Meryll is willing to pay for goodwill computed by capitalizing at 25% LeMans’ average earnings in excess of the 10% normal return based on appraised value of net assets. This is the same level of income experienced by companies similar to LeMans line of business. LeMans' income for the past three years averaged P3,000,000. LeMans’ assets and liabilities are Book Value Appraised ValueAssets excluding goodwill P30,000,000 P39,000,000Liabilities 10,500,000 10,500,000
- Atlas Corp is contemplating acquiring Miya Inc. Relevant information follows:● Miya's average annual earnings in the past 5 years were P540,000● Miya's net assets as the current year-end have a fair value of P5,000,000● The industry average rate of return on equity is 10%● The probable duration of Miya's “excess earnings" is 5 years.If goodwill is measured by capitalizing the average excess earnings at 20%. Howmuch is the goodwill?The owners of a company are planning to sell the business to new interests. The cumulative net earnings for the past 4 years were P6,000,000 including casualty loss of P200,000. The current value of net assets of the company was P16,000,000. Goodwill is determined by capitalizing average earnings at 8%. What is the amount of goodwill? a. P1.450.000 b. P1.550.000 c. P2,215.000 d. P3.375.000At the beginning of the year 1, Down Under Company raises $60 million of equity and uses the proceeds to buy a fixed asset. Operating profits before depreciation (all received in cash) and dividends for the company are expected to be $40 million in year 1, $50 million in year 2, and $60 million in year 3, ath which point the company terminates. The firsms pays no taxes. Assuming stright line depreciation to zero (of 20 million per year) the firm's profits thus equal $20 in year 1, $30 million in year 2 and $40 milion in year 3. If the cost of equity is 6%, the value of the firms equity is: Use the Abnormal Earnings Valuation Method Hint: Book Value per year is affected by the 20 million every year
- 24 At the beginning of the year, Fairbridge, Inc. purchased an investment in Miller Milling Mills for $500,000, representing 10% of the book value of Miller. During the year, Miller reported net income of $800,000 and pays cash dividends of $92,000. At the end of the year, the fair value of Fairbridge’s investment is $525,000. Required At what amount is the investment reported on Fairbridge’s balance sheet at year-end? What amount of income from investments does Fairbridge report? Prepare journal entries to record the transactions for Fairbridge Company.At the beginning of the year 1, Down Under Company raises $60 million of equity and uses the proceeds to buy a fixed asset. Operating profits before depreciation (all received in cash) and dividends for the company are expected to be $40 million in year 1, $50 million in year 2, and $60 million in year 3, ath which point the company terminates. The firms pays no taxes. Assuming stright line depreciation to zero (of 20 million per year) the firm's profits thus equal $20 in year 1, $30 million in year 2 and $40 milion in year 3. If the cost of equity is 6%, the value of the firms equity is: Use the Discounted Dividend Valuation MethodPororo Inc. is considering acquiring Orange Company and uses the following data for analysis: Average annual sales for the past 5 years P2,000,000 Average annual operating expenses for the past 5 years 1,200,000 Average annual cost of goods sold for the past 5 years 7,200,000 Annual increase in depreciation and amortization 750,000 Expected annual increase in wages not to be recovered by increase in revenue 400,000 The book value of Orange’s net identifiable net assets is P8,500,000. The appropriate rate of return is20%. Revaluations were summarized as follows: Revaluation of inventory to fair value P500,000 Increase in allowance for bad debts 50,000 Revaluation of property, plant and equipment to fair value 250,000 Revaluation of bonds payable due to decline in interest 350,000 Fair value of patent 1,250,000 Determine the following as a result of your audit:46.How much should Pororo recognize as goodwill upon acquisition…
- In which of the following situations would Martinez Indus-tries include goodwill in its balance sheet? a. The fair market value of Martinez’s net identifiableassets amounts to $2,000,000. Normal earnings for thisindustry are 15 percent of net identifiable assets. Netincome for the past five years has averaged $390,000.b. Martinez spent $800,000 during the current year for research and development for a new product that prom-ises to generate substantial revenue for at least 10 years. c. Martinez acquired Baxter Electronics at a price in excess ofthe fair market value of Baxter’s net identifiable assets. d. A buyer wishing to purchase Martinez’s entire opera-tion has offered a price in excess of the fair market value of the company’s net identifiable assets.The fair value of depreciable assets of Penner Packaging Company exceeds their book value by $12 million. The assets’ average remaining useful life is 10 years. They are being depreciated by the straight-line method. Finest Foods Industries buys 40% of Penner’s common shares. When adjusting investment revenue and the investment by the equity method, how will the situation described affect those two accounts?