You were hired by Canyon Company, a well-known multinational, to conduct a purchase audit of XYZ Co.’s books to determine a possible purchase price for XYZ Co.’s net assets. You find the following information: Total identifiable assets of XYZ Company at fair value P6,000,000 Liabilities 1,000,000 Average rate of return on net assets for XYZ Co.’s industry 10% Forecasted earnings per year based on past earnings figures 600,000 Determine the amount of goodwill on the basis of the following assumption: Goodwill is equal to the present value of excess earnings discounted at 15% for 3 years. Use five decimal places for your present value

You were hired by Canyon Company, a well-known multinational, to conduct a purchase audit of XYZ Co.’s books to determine a possible purchase price for XYZ Co.’s net assets. You find the following information: Total identifiable assets of XYZ Company at fair value P6,000,000 Liabilities 1,000,000 Average rate of return on net assets for XYZ Co.’s industry 10% Forecasted earnings per year based on past earnings figures 600,000 Determine the amount of goodwill on the basis of the following assumption: Goodwill is equal to the present value of excess earnings discounted at 15% for 3 years. Use five decimal places for your present value

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter9: Metric-analysis Of Financial Statements

Section: Chapter Questions

Problem 9.4.13P: Twenty metrics of liquidity, solvency, and profitability The comparative financial statements of...

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