Maxwell Corporation wants to acquire a retail chain store, Good Way. After a few round of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Maxwell Corporation wants to acquire a retail chain store, Good Way. After a few round of talks, Good Way asks a sales price of $200,000,000, the consultant of Maxwell found out that the net identifiable assets of Good Way is around $140 million, the average earnings of Maxwell for the past three years is $30 million per year. The normal rate of return of the retail chain store is 15%, and the consultant estimated the excess earnings (if any) would last for five years. Instructions: A.) Calculate the goodwill according to the asked sales price of Good Way, B.) What is the performance of Good Way, Why? C.) Should Maxwell acquire Good Way? What is the maximum price? Maxwell Corporation wants to acquire a retail chain store, Good Way. After a few round of talks, Good Way asks a sales price of $200,000,000, the consultant of Maxwell found out that the net identifiable assets of Good Way is around $140 million, the average earnings of Maxwell for the past three years is $30 million per year. The normal rate of return of the retail chain store is 15%, and the consultant estimated the excess earnings (if any) would last for five years. Instructions: A.) Calculate the goodwill according to the asked sales price of Good Way, B.) What is the performance of Good Way, Why? C.) Should Maxwell acquire Good Way? What is the maximum price?
Expert Answer:
Answer rating: 100% (QA)
Maxwell Corporation Solution 1 200000000 Asked Sales ... View the full answer
Related Book For
Intermediate Accounting Volume 1
ISBN: 978-1119496496
12th Canadian edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy
Posted Date:
Students also viewed these accounting questions
-
The production manager of Marigold Corporation wants to acquire a different brand of machine by exchanging the machine that it currently uses in operations for the brand of equipment that others in...
-
The production manager of Sarasota Corporation wants to acquire a different brand of machine by exchanging the machine that it currently uses in operations for the brand of equipment that others in...
-
The production manager of Chesley Corporation wants to acquire a different brand of machine by exchanging the machine that it currently uses in operations for the brand of equipment that others in...
-
Define C2C e-commerce. What role can private forwarding addresses play in the C2C e-commerce marketplace?
-
Describe how a small business owner could use connecting with customers at an emotional level for a competitive advantage.
-
What changes in day-to-day capital expenditure selections can you recommend?
-
Help for Insomniacs In Exercise 1.23, we learned of a study to determine whether just one session of cognitive behavioral therapy can help people with insomnia. In the study, forty people who had...
-
Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company's fiscal year-end. The 2017 balance...
-
2. Consider a discrete-time linear time invariant system with impulse response -38[n+1]+8[n] + 28[n-1] h[n] == a) Plot h[n]. Determine if this system is causal and stable. b) Find and plot the system...
-
Herbert, Inc., acquired all of Rambis Company's outstanding stock on January 1, 2020, for $649,000 in cash. Annual excess amortization of $19,800 results from this transaction. On the date of the...
-
Assume the following shows the initial contents of the specified registers: REGISTER R1 R2 R3 Also assume the following LC-3 machine instructions are loaded into memory at addresses shown: 0x4000...
-
Go to the My Accountant menu in the client's file Go to Additional info in the client's file Go to Account and Settings in the client's file Select Edit client from the Client dashboard Contact...
-
Find 2021 Federal Withholding Tax for an employee in VA. Weekly Gross pay Earnings are $600, weekly 401(k) deduction of 6% and $5 charitable contribution.
-
Emergency procedures, protective equipment, and proper methods of containment and cleanup are listed under what is the section of the Safety Data Sheet?
-
Assume you are interested in assessing how soon a company might need to make significant capital expenditures to replace property, plant, and equipment. What financial statement ratio would you use...
-
Which are important components of diversity planning?
-
Describe how could the U.S. government improve healthcare for all populations under health policy. Include at least one example.
-
Consider the advantages and disadvantages of extending property rights so that everyone would have the right to prevent people imposing any costs on them whatsoever (or charging them to do so).
-
Jia Inc. applies ASPE and had the following statement of financial position at the end of operations for 2019: During 2020, the following occurred: 1. Jia Inc. sold some of its trademarks. The...
-
Sanchez Co. enters into a contract to sell Product A and Product B on January 2, 2020, for an upfront cash payment of $150,000. Product A will be delivered in two years (January 2, 2022) and Product...
-
If Kerry Dahl invests $3,152 now, she will receive $10,000 at the end of 15 years. What annual rate of interest will Kerry earn on her investment? Round your answer to the nearest whole number. Show...
-
In the ground state of a Fermi system, the chemical potential is identical to the Fermi energy: \((\mu)_{T=0}=\varepsilon\left(p_{F} ight)\). Making use of the energy spectrum \(\varepsilon(p)\) of...
-
Solve the Gross-Pitaevskii equation (11.2.23) in a harmonic trap for the case when the scattering length \(a\) is zero. Show that this reproduces the properties of the ground state of the...
-
Solve the Gross-Pitaevskii equation and evaluate the mean field energy, see equations (11.2.21) and (11.2.23), for an isotropic harmonic oscillator trap with frequency \(\omega_{0}\) for the case \(N...
Study smarter with the SolutionInn App