ANEMONE Company engaged your services to compute the goodwill in the purchase of another company which provided the following: * How much is the goodwill? Net IncomeNet AssetsP 2,000,000 P7,800,0008,700,0009,000,000201820192,500,00020203,900,000Goodwill is measured by capitalizing excess earnings at 25% with normal return onaverage net assets at 20%.

Solution:- Calculation of Goodwill as follows under:-

Answered: ANEMONE Company engaged your services…

ANEMONE Company engaged your services to compute the goodwill in the purchase of another company which provided the following: * How much is the goodwill?

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14: Security Structures And Determining Enterprise Values

Section: Chapter Questions

Problem 9EP

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Question

ANEMONE Company engaged your services to compute the goodwill in the purchase of another company which provided the following: *

How much is the goodwill?

Net Income
Net Assets
P 2,000,000 P
7,800,000
8,700,000
9,000,000
2018
2019
2,500,000
2020
3,900,000
Goodwill is measured by capitalizing excess earnings at 25% with normal return on
average net assets at 20%.

Definition Definition Intangible asset that includes proprietary or intellectual property and brand value of a firm. Goodwill is recorded in the books when a firm purchases another firm and the purchase price is more than the fair value of net identifiable assets of the acquired business. The amount of goodwill is recorded on the asset side of the balance sheet (statement of financial position).

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