Illustration 1: Determine the value of goodwill based on 3 years purchase of last 5 years averageprofit, from the following information of a partnership firm of Nilesh and Nikunj. Last five years'profit information is as under:YearProfit2011-122,00,0002012-132,10,0002013-141,90,0002014-152,15,0002015-162,20,000

To determine the value of goodwill based on 3 years' purchase of the last 5 years' average profit,…

Answered: Illustration 1: Determine the value of…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 10RE

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A and B formed a joint operation. The following were the transactions during the year: A B Total purchases 200 160 Total sales 240 120 Expenses paid 400 Other income 20 The joint operation was completed at the end of the year. Each joint operator is entitled to a 10% commission on its purchases and a 20% commission on its sales. Any remaining profit or loss is divided equally. Compute the profit or loss of the joint operation.
Topic: Intangible Assets (Goodwill) Guinevere Company is planning to sell the business to new interests. The cumulative net earnings for the past five years 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 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
Net income for Costmore Sales for the year ended December 31, 2021, was P52,000. The partners, Johnson and Lindstrom, have the following capital balances: Capital Balance Johnson Lindstrom Original capital contribution 100,000 100,000 As of Dec 31, 2021 122,000 128,000 Average in 2021 110,000 115,000 a. If there was no agreement as to the distribution of profits or losses, how much of the net income will be allocated to Johnson? (1) 26000 To Lindstrom? (2) 26000 b. If partnership profits are distributed according to ending capital balance, how much of the net income will be allocated to Johnson? (3) 25376 To Lindstrom? (4) 26624 C. If partnership profits are distributed according to an arbitrary ratio of 65:35 to Johnson and Lindstrom respectively, how much of the net income will be allocated to Johnson? (5) 33800 . To Lindstrom? (6) 18200 d. Assume that instead of earning a net income of P52,000, the partnership incurred losses of P30,000. The partnership agreement calls for…
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WITH COMPUTATION-SOLUTION 65. On December 31, 2019, an entity sold an equipment with an estimated remaining useful life of 10 years. At the same time, the entity leased back the equipment for 2 years. Sale price at above fair value 7,500,000 Fair value of equipment on date of sale 6,000,000 Carrying amount of equipment 5,000,000 What amount of gain should be reported in the income statement for 2019?a. 2,500,000b. 1,500,000c. 1,000,000d. 1,750,000
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Requirements: HOW MUCH IS THE REVALUATION SURPLUS ON THE YEAR OF REVALUATION? HOW MUCH IS THE GAIN OR LOSS IF THE BLDG IS SOLD FOR P8MILLION ONE YEAR AFTER REVALUATION? HOW MUCH IS THE BLANCE OF REVALUATION SURPLUS AFTER THE SALE?
A property cost P100k with resale value at the end of 7" year of P5k. Determine book value at the end of year 4 using Matheson Method. Select one: a. P18,049.178 b. P18,940.178 c. P49.018.187 d. P45,094.187
Accounting what is the taxable income
An asset's book value is $18,600 on December 31, Year 5. Assuming the asset is sold on December 31, Year 5 for $14,400, the company should record: Multiple Choice A gain on sale of $13,200. Neither a gain nor a loss is recognized on this transaction. A loss on sale of $4,200. A loss on sale of $13,200. A gain on sale of $4,200.
Which of the following is a requirment regarding replacement property for a deferred like kind exchange A Replacement proepty must be identified within 3 years before the transfer of the TP propery. B. The tax return for the year of the trnsfer mqy no be filed before the replacemnt property is acquired C the value of identified replacemnt properties may not exceed 500% the aggre
NCF practice a) What is the ncf from the sale of this asset - purchased for $250,000, 7-year property, sold at end of year 6 for $50,000, tax rate = 21%? basis = MACRS depreciation (as decimal) * sale price step 1: sales price - basis = gain/loss step 2: gain * loss tax rate = tax step 3: sales price - tax = ncf

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