10.2 B52 Corporation’s pre-tax accounting income of $726,000 for the year 2020 included the following items: Amortization of identifiable intangibles $140,000 Depreciation of building 119,000 Loss from discontinued operations 46,000 Unusual, non-recurring gains 157,000 Profit-sharing payments to employees 69,300 Lush Industries Ltd. would like to purchase B52 Corporation. In trying to measure B52’s normalized earnings for 2020, Lush determines that the building’s fair value is triple the book value and that its remaining economic life is double the life that B52 is using. Lush would continue the profit-sharing payments to employees, with the payments being based on income from continuing operations before amortization and depreciation. Required Calculate the 2020 normalized earnings amount of B52 Corporation that Lush would use to calculate goodwill.
10.2
B52 Corporation’s pre-tax accounting income of $726,000 for the year 2020 included the following items:
|
Amortization of identifiable intangibles |
$140,000 |
|
Depreciation of building |
119,000 |
|
Loss from discontinued operations |
46,000 |
|
Unusual, non-recurring gains |
157,000 |
|
Profit-sharing payments to employees |
69,300 |
Lush Industries Ltd. would like to purchase B52 Corporation. In trying to measure B52’s normalized earnings for 2020, Lush determines that the building’s fair value is triple the book value and that its remaining economic life is double the life that B52 is using. Lush would continue the profit-sharing payments to employees, with the payments being based on income from continuing operations before amortization and depreciation.
Required
Calculate the 2020 normalized earnings amount of B52 Corporation that Lush would use to calculate goodwill.
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