Naughty Company assembled the following data relative to a certain entity in determining the amount to...

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Naughty Company assembled the following data relative to a certain entity in determining the amount to be paid for net assets and goodwill: Assets at fair value before goodwill 2,600,000 Liabilities 900,000 Shareholders' equity 1,700,000 Net earnings: 2016 200,000 2017 230,000 2018 300,000 2019 250,000 2020 270,000 Calculate the amount of goodwill under the following: 1. Average earnings are capitalized at 10%. 2. A return of 8% is considered normal on net assets at fair value. Excess earnings are capitalized at 15%. 3. A return of 10% is considered normal on net assets at fair value. Goodwill is measured at 5 years excess earnings. 4. A return of 10% is considered normal on net assets at fair value. Excess earnings are expected to continue for 10 years. Goodwill is measured by the present value method using a 12% rate. The present value of an ordinary annuity of 1 at 12% for 10 years is 5.65. Naughty Company assembled the following data relative to a certain entity in determining the amount to be paid for net assets and goodwill: Assets at fair value before goodwill 2,600,000 Liabilities 900,000 Shareholders' equity 1,700,000 Net earnings: 2016 200,000 2017 230,000 2018 300,000 2019 250,000 2020 270,000 Calculate the amount of goodwill under the following: 1. Average earnings are capitalized at 10%. 2. A return of 8% is considered normal on net assets at fair value. Excess earnings are capitalized at 15%. 3. A return of 10% is considered normal on net assets at fair value. Goodwill is measured at 5 years excess earnings. 4. A return of 10% is considered normal on net assets at fair value. Excess earnings are expected to continue for 10 years. Goodwill is measured by the present value method using a 12% rate. The present value of an ordinary annuity of 1 at 12% for 10 years is 5.65.

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Calculate the amount of goodwill under the following 1 Average earnings are capitalized at 10 Ans Av... View the full answer