Question: Please guide me in answer this exercise ABC Co. engaged your services to compute the goodwill and purchase price for the acquisition of XYZ Corp.
Please guide me in answer this exercise

ABC Co. engaged your services to compute the goodwill and purchase price for the acquisition of XYZ Corp. The following data are available for XYZ Corp.: Current Asset 6,000,000 Current Liabilities 3,500,000 Investments 2,500,000 Non-current liabilities 2,500,000 Property, Plant and Equipment 13,000,000 Ordinary shares 7,000,000 Share Premium 1,500,000 Accumulated Profits 7,000,000 O Total Assets 21,500,000 Total Liabilities and Equity 21,500,000 You found out that the investments have a fair value of P2,000,000 and the current assets and property, plant and equipment are understated by P800,000 and P1,850,000 respectively. All other assets and equities are properly stated. An examination of the company's income for the last 4 years revealed that the total earnings amounted to P9,000,000. The said earnings include gain on sale during the last year of P100,000 and P150,000 annual bonus of the president. The normal rate of return is 10%. Compute for the goodwill (purchase of goodwill for 4 years)
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