ABC Co. engaged your services to compute the goodwill and purchase price for the acquisition of XYZ Corp. The following data are available for XYZ Corp.: 6,000,000 Current Liabilities 2,500,000 Non-current liabilities Property, Plant and Equipment 13,000,000 Ordinary shares Share Premium 3,500,000 2,500,000 7,000,000 1,500,000 7,000,000 21,500,000 Total Liabilities and Equity 21,500,000 Current Asset Investments Accumulated Profits Total Assets You found out that the investments have a fair value of P2,000,000 and the current assets and property, plant and equipment are understated by P800,000 and P1,850,000 respectively. All other assets and equities are properly stated. An examination of the company's income for the last 4 years revealed that the total earnings amounted to P9,000,000. The said earnings include gain on sale during the last year of P100,000 and P150,000 annual bonus of the president. The normal rate of return is 10%. Compute for the goodwill (purchase of goodwill for 4 vears)

ABC Co. engaged your services to compute the goodwill and purchase price for the acquisition of XYZ Corp. The following data are available for XYZ Corp.: 6,000,000 Current Liabilities 2,500,000 Non-current liabilities Property, Plant and Equipment 13,000,000 Ordinary shares Share Premium 3,500,000 2,500,000 7,000,000 1,500,000 7,000,000 21,500,000 Total Liabilities and Equity 21,500,000 Current Asset Investments Accumulated Profits Total Assets You found out that the investments have a fair value of P2,000,000 and the current assets and property, plant and equipment are understated by P800,000 and P1,850,000 respectively. All other assets and equities are properly stated. An examination of the company's income for the last 4 years revealed that the total earnings amounted to P9,000,000. The said earnings include gain on sale during the last year of P100,000 and P150,000 annual bonus of the president. The normal rate of return is 10%. Compute for the goodwill (purchase of goodwill for 4 vears)

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 30E

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