Meck Company is considering the acquisition of another entity. The following data relate to the acquiree: Shareholders' equity 5,000,000 Earnings for prior three years 1,500,000 The acquiree has a valuable patent which is not recorded. If the entity is sold, the patent would be transferred to the buyer for P500,000. Other assets are properly appraised. The patent has a remaining life of 5 years. The earnings of the entity are expected to increase 10% more than the average earnings of the past three years before taking into consideration the amortization of the patent cost. Compute for the goodwill under the following methods: 1. Average future earnings are capitalized at 8% 2. goodwill is measured at the average excess earnings capitalized at 10% with normal rate at 8%. 3. Goodwill is measured at the present value of the average excess earnings discounted at 10% for four years with normal rate of 8%. The present value of an ordinary annuity of 1 for 4 years at 10% is 3.17.

Meck Company is considering the acquisition of another entity. The following data relate to the acquiree: Shareholders' equity 5,000,000 Earnings for prior three years 1,500,000 The acquiree has a valuable patent which is not recorded. If the entity is sold, the patent would be transferred to the buyer for P500,000. Other assets are properly appraised. The patent has a remaining life of 5 years. The earnings of the entity are expected to increase 10% more than the average earnings of the past three years before taking into consideration the amortization of the patent cost. Compute for the goodwill under the following methods: 1. Average future earnings are capitalized at 8% 2. goodwill is measured at the average excess earnings capitalized at 10% with normal rate at 8%. 3. Goodwill is measured at the present value of the average excess earnings discounted at 10% for four years with normal rate of 8%. The present value of an ordinary annuity of 1 for 4 years at 10% is 3.17.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

an entity acquired furniture and fittings on 1 July 2021 for $42 000. The estimated useful life of the furniture and fittings at acquisition date was 8 years and the residual value was $2000. The company sold all the furniture and fittings on 1 January 2027 for $18 000. The journal entry to reflect the sale is:
Concord Corporation purchased for $288,000 a 25% interest in Murphy, Inc. This investment enables Concord to exert significant influence over Murphy. During the year, Murphy earned net income of $173,000 and paid dividends of $54,000. Prepare Concord's journal entries related to this investment. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit (To record the purchase.) (To record the net income.) (To record the dividend.)
i need the answer quickly
please print the journal entries
Bear Web Securities acquired a patent on January 1, 2022 for $68,000. The patent is expected to be of benefit to Bear for 6 years. After using the patent for two year it was determined that an advancement by a competitor would make the patent worthless in 3 years. Required: 1. Record the acquisition of the patent. 2. Record the patents amortization for 2022, 2023, and 2024.
On December 31, 2024, the end of the fiscal year, Revolutionary Industries completed the sale of its robotics business for $11.2 million. The robotics business segment qualifies as a component of the entity, according to GAAP. Consider the following additional information: The book value of the assets of the segment was $8.1 million at the time of the sale. The income from operations of the segment during 2024 was $5.1 million. Pretax income from other continuing operations for the year totaled $13.1 million. The income tax rate is 25 %. Prepare the lower portion of the 2024 income statement beginning with income from continuing operations before income taxes. Note: Loss amounts should be indicated with a minus sign. Enter your answers in whole dollars and not in millions. For example, $4,000,000 rather than $4.