The president of Carnival Corp. Is considering purchasing Pirate Inc., whose balance sheet Is summarized as...
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The president of Carnival Corp. Is considering purchasing Pirate Inc., whose balance sheet Is summarized as follows: Current Assets Fixed Assets Other Assets $ 632,000 902,000 295,000 Current Liabilities Long-Term Llabilitles Common Stock Retained Earnings $ 356,000 367,000 540,000 566,000 The fair market value of current assets Is $665,000 because of the undervaluation of Inventory. The recorded book values of all other net assets approximate current fair values. The normal rate of return on net assets for the Industry Is 15%. The average expected annual earning's projected for Cloos Is $192,000. A. If the excess earnings continue for 10 years, how much should Carnival be willing to pay for goodwill? Estimate goodwill by solving for present value The president of Carnival Corp. Is considering purchasing Pirate Inc., whose balance sheet Is summarized as follows: Current Assets Fixed Assets Other Assets $ 632,000 902,000 295,000 Current Liabilities Long-Term Llabilitles Common Stock Retained Earnings $ 356,000 367,000 540,000 566,000 The fair market value of current assets Is $665,000 because of the undervaluation of Inventory. The recorded book values of all other net assets approximate current fair values. The normal rate of return on net assets for the Industry Is 15%. The average expected annual earning's projected for Cloos Is $192,000. A. If the excess earnings continue for 10 years, how much should Carnival be willing to pay for goodwill? Estimate goodwill by solving for present value
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Compute the present value of average expected annual earn... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0176509736
10th Canadian Edition, Volume 1
Authors: Donald Kieso, Jerry Weygandt, Terry Warfield, Nicola Young,
Posted Date:
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