Niagara Company is contemplating to acquire Toronto, Inc. on January 1, 2020. The information on Toronto's...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Niagara Company is contemplating to acquire Toronto, Inc. on January 1, 2020. The information on Toronto's profit and net assets for the last five years is as follows: Profit P 4,000,000 Net Assets 2019 P20,200,000 2018 3,200,000 20,000,000 2017 3,000,000 18,500,000 2016 3,800,000 17,900,000 2015 2,500,000 15,600,000 It is agreed that Niagara is willing to pay for goodwill measured by capitalizing at 40% excess of the average profits over normal return on net assets. The normal return on average net assets for the industry to which Toronto belongs is 10%. How much should Niagara Company pay to Toronto, Inc. in the acquisition of the latter's net assets? Niagara Company is contemplating to acquire Toronto, Inc. on January 1, 2020. The information on Toronto's profit and net assets for the last five years is as follows: Profit P 4,000,000 Net Assets 2019 P20,200,000 2018 3,200,000 20,000,000 2017 3,000,000 18,500,000 2016 3,800,000 17,900,000 2015 2,500,000 15,600,000 It is agreed that Niagara is willing to pay for goodwill measured by capitalizing at 40% excess of the average profits over normal return on net assets. The normal return on average net assets for the industry to which Toronto belongs is 10%. How much should Niagara Company pay to Toronto, Inc. in the acquisition of the latter's net assets?
Expert Answer:
Answer rating: 100% (QA)
2 Year Profit Net Assets 2019 4000000 20200000 2018 3200000 20000000 2017 3000000 1... View the full answer
Related Book For
Fundamental Accounting Principles Volume II
ISBN: 978-1260305838
16th Canadian edition
Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann
Posted Date:
Students also viewed these accounting questions
-
The valuation analysis for the last five years of the stock price is as follows: The price of Netflix stock price over the last five years is list as (Jan. 27, 2017 $142.45, Jan. 26, 2018 $274.60,...
-
For the last five years the sales of Departments D, E, and F have maintained a relatively stable ratio of 13: 17: 21. Department E is forecasting sales of $478,000 for next year. Based on the past...
-
How much should Beasley record as total assets acquired in the Donovan merger? a. $400,000 b. $420,000 c. $410,000 d. $480,000 On May 1, Donovan Company reported the following account balances:...
-
Start with the partial model in the file Ch19 P08 Build a Model.xls on the textbooks Web site. Maggies Magazines (MM) has straight nonconvertible bond that currently yield 9%. MMs stock sells for $22...
-
Christian Childrens Fund, Inc. (CCF), established in 1938, is an international, nonsectarian, non-profit organization dedicated to assisting children. With program offices around the world, it...
-
Atlantis Company issued bonds on January 1, 2006. The bonds had a coupon rate of 5.0%, with interest paid semiannually. The face value of the bonds is $1,000 and the bonds mature on January 1, 2036....
-
George Tanner died October 2, 2023, survived by his son Thomas and his daughter Gigi Tanner Stewart and her children, Sam and Cindy. George was the sole stockholder of Tanner, Inc., a C corporation....
-
Kansas Seed Corn Supplies, a company with 100,000 shares of common stock outstanding, had the following transactions during 20X1, its first year in business: Sales ....... 1,000,000 pounds @ $5...
-
A 2.30 g air-inflated balloon is given an excess negative charge, q = 3.25 10-8 C, by rubbing it with a blanket. It is found that a charged rod can be held above the balloon at a distance of d = 7.60...
-
You have won a lottery! You will receive $200,000, after taxes, each year for the next five years. Required Describe the process you will go through in determining how to invest your winnings....
-
The free energy of mixing (per mole of lattice sites) of a polymer (B) solution in A (according to the Flory Huggins model) is RT * [phi_{A} * ln(phi_{A}) + phi_{a}/s_{y} * ln(phi_{a}) + chi*phi_{A}...
-
Discuss the major risks involved in foreign stock investing. How can they be hedged?
-
Why was Novos P/E ratio so much smaller than its key competitors P/E s ? What were the implications for Novos ability to compete in world markets?
-
Explain the concept of mildly segmented capital markets.
-
What are Yankee, samurai, or bulldog bonds?
-
What is the difference between the euro bond market and the Eurobond market?
-
Part 1 A . Deciding uponlong - term and annual objectives B . Developing vision and mission statements C . The feedback loop D . Deciding upon internal strengths and weaknesses E . Deciding upon...
-
The Place-Plus real estate development firm in Problem 24 is dissatisfied with the economists estimate of the probabilities of future interest rate movement, so it is considering having a financial...
-
Monkey Mortgage Inc. engaged in the following non-strategic investment transactions during 2020: Required 1. Prepare an amortization schedule for the Jaguar bond showing only 2020 and 2021. 2....
-
Which of the following is not an advantage of the corporate form for organizations: a. Ownership rights are easily transferable b. Continuous life c. Corporate taxation d. Ease of capital accumulation
-
Zero-rated products and GST/HST-exempt products and services have unique treatment. Fifty Cent Recording Studio has approached you for direction on how to handle accounting for GST on their music...
-
For tidal waves in a channel, what is the mathematical relationship between the speed of the wave and the depth of the channel?
-
What is the change of the speed of sound with frequency called?
-
In the design of a horn tweeter, which parameter is most critical in specifying where the cutoff frequency for the loudspeaker would lie? Why?
Study smarter with the SolutionInn App