Required: a-1. Would you be willing to pay more than $200,000 for the restaurant near the campus? multiple choice Yes No a-2. What is the maximum price you would be willing to pay for the business? (Do not round intermediate calculations.) b. If you purchased the restaurant near the campus for $225,000 and the fair value of the assets you acquired was $200,000, identify the account along with its balance, that is used to record the additional amount paid over the fair value of the assets.
Required: a-1. Would you be willing to pay more than $200,000 for the restaurant near the campus? multiple choice Yes No a-2. What is the maximum price you would be willing to pay for the business? (Do not round intermediate calculations.) b. If you purchased the restaurant near the campus for $225,000 and the fair value of the assets you acquired was $200,000, identify the account along with its balance, that is used to record the additional amount paid over the fair value of the assets.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Exercise 6-17 (Algo) Goodwill effect on ROI LO 9
Assume that fast-food restaurants generally provide an ROI of 16%, but that such a restaurant near a college campus has an ROI of 18% because its relatively large volume of business generates an above-average turnover (sales/assets). The replacement value of the restaurant’s plant and equipment is $200,000. If you were to invest that amount in a restaurant elsewhere in town, you could expect a 16% ROI.
Required:
a-1. Would you be willing to pay more than $200,000 for the restaurant near the campus?
-
Yes
-
No
a-2. What is the maximum price you would be willing to pay for the business? (Do not round intermediate calculations.)
b. If you purchased the restaurant near the campus for $225,000 and the fair value of the assets you acquired was $200,000, identify the account along with its balance, that is used to record the additional amount paid over the fair value of the assets.
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