years Guenivere Company is planning to sell the business to new interests. The cumulative net earnings...

  

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years Guenivere Company is planning to sell the business to new interests. The cumulative net earnings for the past five y amounted to P16,500,000 including expropriation loss of P1,500,000. The normal rate of return is 20%. The fair value of net assets of the entity at current year-end was P10,000,000. What is the amount of goodwill if: 1. Excess earnings are purchased for 5 years? a. 8,000,000 b. 4,000,000 c. 5,000,000 d. 4,500,000 2. Excess earnings are capitalized at 25%? a. 7,200,000 b. 6,400,000 c. 8,000,000 d. 3,600,000 3. Annual average earnings are purchased for 3 years? a. 10,800,000 b. 18,000,000 C. 4,800,000 d. 5,400,000 4. Annual average earnings are capitalized at 25%? a. 1,600,000 b. 3,600,000 c. 4,400,000 d. 2,000,000 5. Excess earnings are discounted at 12% for 5 years? The PV of an ordinary annuity of 1 for 5 years at 12% is 3.60. a. 12,960,000 b. 10,800,000 C. 5,760,000 d. 7,200,000 years Guenivere Company is planning to sell the business to new interests. The cumulative net earnings for the past five y amounted to P16,500,000 including expropriation loss of P1,500,000. The normal rate of return is 20%. The fair value of net assets of the entity at current year-end was P10,000,000. What is the amount of goodwill if: 1. Excess earnings are purchased for 5 years? a. 8,000,000 b. 4,000,000 c. 5,000,000 d. 4,500,000 2. Excess earnings are capitalized at 25%? a. 7,200,000 b. 6,400,000 c. 8,000,000 d. 3,600,000 3. Annual average earnings are purchased for 3 years? a. 10,800,000 b. 18,000,000 C. 4,800,000 d. 5,400,000 4. Annual average earnings are capitalized at 25%? a. 1,600,000 b. 3,600,000 c. 4,400,000 d. 2,000,000 5. Excess earnings are discounted at 12% for 5 years? The PV of an ordinary annuity of 1 for 5 years at 12% is 3.60. a. 12,960,000 b. 10,800,000 C. 5,760,000 d. 7,200,000

Answer rating: 100% (QA)

Guenivere Company Cumulative net earnings for past five years P 16500000 Included expropriation loss ... View the full answer