Entity earnings Industry earnings in pesos P 700,000 Year in percent 2012 11 2013 800,000 11 2014 800,000 12 2015 900,000 12 2016 1,000,000 13 2017 1,100,000 14 2018 1,200,000 15 2019 1,800,000 19
Entity earnings Industry earnings in pesos P 700,000 Year in percent 2012 11 2013 800,000 11 2014 800,000 12 2015 900,000 12 2016 1,000,000 13 2017 1,100,000 14 2018 1,200,000 15 2019 1,800,000 19
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter8: Liabilities And Stockholders' Equity
Section: Chapter Questions
Problem 8.1.1MBA
Related questions
Question
ABC Corporation is planning to purchase another entity. ABC gathered the following information based on the publicly available financial reports:
On the target acquisition date, the fair value of the net assets of the entity is expected to be at P6,000,000. ABC deems a 15%-rate appropriate for capitalization purposes. If ABC is willing to value the goodwill using the capitalization of average earnings method based on the past five years, how much should its offer price be on the entity?
![Entity earnings Industry earnings
in pesos
P 700,000
Year
in percent
2012
11
2013
800,000
11
2014
800,000
12
2015
900,000
12
2016
1,000,000
13
2017
1,100,000
14
2018
1,200,000
15
2019
1,800,000
19](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6e0b30ae-4488-4483-8129-d9433494febd%2Fc8da95a4-d7a3-4ff4-9d27-6345926eda1e%2Fpne8la9_processed.png&w=3840&q=75)
Transcribed Image Text:Entity earnings Industry earnings
in pesos
P 700,000
Year
in percent
2012
11
2013
800,000
11
2014
800,000
12
2015
900,000
12
2016
1,000,000
13
2017
1,100,000
14
2018
1,200,000
15
2019
1,800,000
19
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Survey of Accounting (Accounting I)](https://www.bartleby.com/isbn_cover_images/9781305961883/9781305961883_smallCoverImage.gif)
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
![Survey of Accounting (Accounting I)](https://www.bartleby.com/isbn_cover_images/9781305961883/9781305961883_smallCoverImage.gif)
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning