Jason Company has recently took over Teague Company at a cost of P16,000,000Jason Company acquired the following
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- Jason Company has recently took over Teague Company at a cost of P16,000,000Jason Company acquired the following assets at fair value:
Land and building | 6,500,000 |
Production machinery | 3,200,000 |
Inventory | 2,800,000 |
Accounts receivable | 1,400,000 |
In addition Teague Company owned but had not recognized the following:
Trademark | 750,000 |
Patent - for special coating formula | 1,000,000 |
The amount of goodwill to be recognized arising from the acquisition is
2. Jimmy Company engaged you to assist in the acquisition of Photo Company on January 2022. It was agreed that Photo Company would receive an amount for goodwill based on the capitalization of excess earnings at 60%.
The following information was taken from the records of Photo Company.
Year | 2018 | `2019 | 2020 | 2021 | 2022 |
Net income | 250,000 | 275,000 | 320,000 | 360,000 | 400,000 |
Net assets | 750,000 | 810,000 | 890,000 | 960,000 | 1,040,000 |
The normal rate of return on the average net assets in the industry to which Photo Company operates is 15%
The purchase price for Photo Company is
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