At the time of her death, Betty owned 70% of the stock of Crane Corporation. Over the past five years, Crane reported an average net profit of $240,000, and the book value of its stock is $720,000. Assume that 8% is an appropriate after-tax rate of return for Crane’s type of business.

If required, round all computations to the nearest dollar.

a. What is the amount of Crane’s goodwill?

b. How much as to the Crane stock is included in Betty’s gross estate?

Answer rating: 100% (QA)

a Computation of Goodwill in s Book value of stock ... View the full answer