Better Company is negotiating to acquire the net assets of Best Company. Better is willing to pay for goodwill computed by capitalizing at 20% Best' average earnings in excess of the 10% normal return based on appraised value of net assets. The assets and liabilities of Best Company at appraised values are P39,000,000 and P10,500,000 respectively. Best' income for the past three years average P2,950,000. What is the amount of goodwill?
Better Company is negotiating to acquire the net assets of Best Company. Better is willing to pay for goodwill computed by capitalizing at 20% Best' average earnings in excess of the 10% normal return based on appraised value of net assets. The assets and liabilities of Best Company at appraised values are P39,000,000 and P10,500,000 respectively. Best' income for the past three years average P2,950,000. What is the amount of goodwill?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Better Company is negotiating to acquire the net assets of Best Company. Better is willing to pay
for goodwill computed by capitalizing at 20% Best' average earnings in excess of the 10% normal
return based on appraised value of net assets. The assets and liabilities of Best Company at
appraised values are P39,000,000
and P10,500,000 respectively. Best' income for the past three years average P2,950,000.
What is the amount of goodwill?
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