IXORA Company engaged your services to compute the goodwill in the purchase of another company which provided the following How much is the goodwill ? Net IncomeNet AssetsP 2,000,000 P7,800,0008,700,0009,000,000201820192,500,00020203,900,000Goodwill is measured by capitalizing excess earnings at 25% with normal return onaverage net assets at 20%.

Goodwill represents the intangible asset for the company and it shows the difference in the purchase…

Answered: XORA Company engaged your services to…

XORA Company engaged your services to compute the goodwill in the purchase of another company which provided the following

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

IXORA Company engaged your services to compute the goodwill in the purchase of another company which provided the following

How much is the goodwill ?

Net Income
Net Assets
P 2,000,000 P
7,800,000
8,700,000
9,000,000
2018
2019
2,500,000
2020
3,900,000
Goodwill is measured by capitalizing excess earnings at 25% with normal return on
average net assets at 20%.

Definition Definition Intangible asset that includes proprietary or intellectual property and brand value of a firm. Goodwill is recorded in the books when a firm purchases another firm and the purchase price is more than the fair value of net identifiable assets of the acquired business. The amount of goodwill is recorded on the asset side of the balance sheet (statement of financial position).

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