Niagara Company is contemplating acquiring Toronto, Inc. on January 1, 2020. The information on Toronto's profit and net assets for the last five years are as follows: Profit Net Assets 2019 P 4,000,000 P20,200,000 2018 3,200,000 20,000,000 2017 3,000,000 18,500,000 2016 3,800,000 17,900,000 2015 2,500,000 15,600,000 It is agreed that Niagara is willing to pay for goodwill measured by capitalizing at 40% excess of the average profits over normal return on net assets. The normal return on average net assets for the industry to which Toronto belongs is 10%. How much should Niagara Company pay to Toronto, Inc. in the acquisition of the latter's net assets? A. 20,200,000 B. 22,080,000 C. 23,400,000 D. 23,840,000
Niagara Company is contemplating acquiring Toronto, Inc. on January 1, 2020. The information on Toronto's profit and net assets for the last five years are as follows:
Profit Net Assets
2019 P 4,000,000 P20,200,000
2018 3,200,000 20,000,000
2017 3,000,000 18,500,000
2016 3,800,000 17,900,000
2015 2,500,000 15,600,000
It is agreed that Niagara is willing to pay for
How much should Niagara Company pay to Toronto, Inc. in the acquisition of the latter's net assets?
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