Homework Answers
Excess earnings = Average earnings - Normal earnings
= 540000 - 3000000*15%
= 90000
Goodwill = 90000*3 = $270000
Price to be offered for Avery company = fair Value of the net assets + Goodwill
= 3000000+270000
= $3270000
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During the past several years the annual net income of Avery Company has averaged $540,000. At...
Problem 3 Avery Company acquired the net assets of Iowa Company on June 1, 20X1. The...
Problem 3 Avery Company acquired the net assets of Iowa Company on June 1, 20X1. The net assets acquired include plant assets that are provisionally estimated to have a fair value of $410,000 with a 10-year usable life and no salvage value and buildings that are provisionally estimated to have a fair value of $162,000 with a 15-year usable life and salvage value of $18,000. Depreciation is recorded based on months in service. The remaining unallocated amount of the price...
On January 1, 2013, Porsche Company acquired the net assets of Saab Company for $450,080 cash....
On January 1, 2013, Porsche Company acquired the net assets of
Saab Company for $450,080 cash. The fair value of Saab’s
identifiable net assets was $374,890 on this date. Porsche Company
decided to measure goodwill impairment using the present value of
future cash flows to estimate the fair value of the reporting unit
(Saab). The information for these subsequent years is as
follows:
For each year determine the amount of goodwill impairment, if
any.
Exercise 2-10 On January 1, 2013,...
Estimating Goodwill and Valuation LO 7 Alpha Company is considering the purchase of Beta Company. Alpha...
Estimating Goodwill and Valuation LO 7 Alpha Company is considering the purchase of Beta Company. Alpha has collected the following data about Beta: Beta Estimated Company Market Book Values Values Total identifiable $585,000 $750,000 assets Total liabilities _320,000 320,000 Owners' equity $265,000 Cumulative total net cash earnings for the past five years of $850,000 includes extraordinary cash gains of $67,000 and nonrecurring cash losses of $48,000. Alpha Company expects a return on its investment of 15%. Assume that Alpha prefers...
On January 1, 2013, Porsche Company acquired the net assets of Saab Company for $450,420 cash....
On January 1, 2013, Porsche Company acquired the net assets of Saab Company for $450,420 cash. The fair value of Saab's Identifiable net assets was $374,640 on this date. Porsche Company decided to measure goodwill Impairment using the present value of future cash flows to estimate the fair value of the reporting unit (Saab). The information for these subsequent years is as follows: Year 2014 2015 2016 Present Value of Future Cash Flows $400,600 $400,450 $350,410 Carrying Value of Saab's...
On January 1, 2013, Porsche Company acquired the net assets of Saab Company for $450,080 cash....
On January 1, 2013, Porsche Company
acquired the net assets of Saab Company for $450,080 cash. The fair
value of Saab’s identifiable net assets was $374,890 on this date.
Porsche Company decided to measure goodwill impairment using the
present value of future cash flows to estimate the fair value of
the reporting unit (Saab). The information for these subsequent
years is as follows: For each year determine the amount of goodwill
impairment, if any. Please show work
Exercise 2-10 On...
Alpha Company is considering the purchase of Beta Company. Alpha has collected the following data about...
Alpha Company is considering the purchase of Beta Company. Alpha has collected the following data about Beta: Total Identifiable assets Total liabilities Owners' equity Beta Company Book Values $631,600 288,700 $342,900 Estimated Market Values $735,800 328,300 Cumulative total net cash earnings for the past five years of $927,700 Includes extraordinary cash gains of $69,800 and nonrecurring cash losses of $44,300. Alpha Company expects a retum on Its Investment of 13%. Assume that Alpha prefers to use cash earnings rather than...
Exercise 2-10 On January 1, 2013, Porsche Company acquired the net assets of Saab Company for...
Exercise 2-10 On January 1, 2013, Porsche Company acquired the net assets of Saab Company for $450,800 cash. The fair value of Saab’s identifiable net assets was $375,520 on this date. Porsche Company decided to measure goodwill impairment using the present value of future cash flows to estimate the fair value of the reporting unit (Saab). The information for these subsequent years is as follows: Year Present Value of Future Cash Flows Carrying Value of Saab’s Identifiable Net Assets* Fair...
Exercise 2-10 On January 1, 2013, Porsche Company acquired the net assets of Saab Company for...
Exercise 2-10
On January 1, 2013, Porsche Company acquired the net assets of Saab
Company for $449,660 cash. The fair value of Saab’s identifiable
net assets was $375,570 on this date. Porsche Company decided to
measure goodwill impairment using the present value of future cash
flows to estimate the fair value of the reporting unit (Saab). The
information for these subsequent years is as follows:
Year
Present Value
of Future Cash Flows
Carrying Value of
Saab’s Identifiable
Net Assets*
Fair...
Exercise 2-10 On January 1, 2013, Porsche Company acquired the net assets of Saab Company for...
Exercise 2-10
On January 1, 2013, Porsche Company acquired the net assets of Saab
Company for $449,660 cash. The fair value of Saab’s identifiable
net assets was $375,570 on this date. Porsche Company decided to
measure goodwill impairment using the present value of future cash
flows to estimate the fair value of the reporting unit (Saab). The
information for these subsequent years is as follows:
Year
Present Value
of Future Cash Flows
Carrying Value of
Saab’s Identifiable
Net Assets*
Fair...
Exercise 1-2 Alpha Company is considering the purchase of Beta Company. Alpha has collected the following...
Exercise 1-2 Alpha Company is considering the purchase of Beta Company. Alpha has collected the following data about Beta: Beta Company Estimated Book Values Market Values Total identifiable assets $541,800 $734,700 Total liabilities 317,800 309,500 Owners' equity $224,000 Cumulative total net cash earnings for the past five years of $906,800 includes extraordinary cash gains of $64,800 and nonrecurring cash losses of $46,000. Alpha Company expects a return on its investment of 13%. Assume that Alpha prefers to use cash earnings...
Problem 3 Avery Company acquired the net assets of Iowa Company on June 1, 20X1. The net assets acquired include plant assets that are provisionally estimated to have a fair value of $410,000 with a 10-year usable life and no salvage value and buildings that are provisionally estimated to have a fair value of $162,000 with a 15-year usable life and salvage value of $18,000. Depreciation is recorded based on months in service. The remaining unallocated amount of the price...
On January 1, 2013, Porsche Company acquired the net assets of
Saab Company for $450,080 cash. The fair value of Saab’s
identifiable net assets was $374,890 on this date. Porsche Company
decided to measure goodwill impairment using the present value of
future cash flows to estimate the fair value of the reporting unit
(Saab). The information for these subsequent years is as
follows:
For each year determine the amount of goodwill impairment, if
any.
Exercise 2-10 On January 1, 2013,...
Estimating Goodwill and Valuation LO 7 Alpha Company is considering the purchase of Beta Company. Alpha has collected the following data about Beta: Beta Estimated Company Market Book Values Values Total identifiable $585,000 $750,000 assets Total liabilities _320,000 320,000 Owners' equity $265,000 Cumulative total net cash earnings for the past five years of $850,000 includes extraordinary cash gains of $67,000 and nonrecurring cash losses of $48,000. Alpha Company expects a return on its investment of 15%. Assume that Alpha prefers...
On January 1, 2013, Porsche Company acquired the net assets of Saab Company for $450,420 cash. The fair value of Saab's Identifiable net assets was $374,640 on this date. Porsche Company decided to measure goodwill Impairment using the present value of future cash flows to estimate the fair value of the reporting unit (Saab). The information for these subsequent years is as follows: Year 2014 2015 2016 Present Value of Future Cash Flows $400,600 $400,450 $350,410 Carrying Value of Saab's...
On January 1, 2013, Porsche Company
acquired the net assets of Saab Company for $450,080 cash. The fair
value of Saab’s identifiable net assets was $374,890 on this date.
Porsche Company decided to measure goodwill impairment using the
present value of future cash flows to estimate the fair value of
the reporting unit (Saab). The information for these subsequent
years is as follows: For each year determine the amount of goodwill
impairment, if any. Please show work
Exercise 2-10 On...
Alpha Company is considering the purchase of Beta Company. Alpha has collected the following data about Beta: Total Identifiable assets Total liabilities Owners' equity Beta Company Book Values $631,600 288,700 $342,900 Estimated Market Values $735,800 328,300 Cumulative total net cash earnings for the past five years of $927,700 Includes extraordinary cash gains of $69,800 and nonrecurring cash losses of $44,300. Alpha Company expects a retum on Its Investment of 13%. Assume that Alpha prefers to use cash earnings rather than...
Exercise 2-10
On January 1, 2013, Porsche Company acquired the net assets of Saab
Company for $449,660 cash. The fair value of Saab’s identifiable
net assets was $375,570 on this date. Porsche Company decided to
measure goodwill impairment using the present value of future cash
flows to estimate the fair value of the reporting unit (Saab). The
information for these subsequent years is as follows:
Year
Present Value
of Future Cash Flows
Carrying Value of
Saab’s Identifiable
Net Assets*
Fair...
Exercise 2-10
On January 1, 2013, Porsche Company acquired the net assets of Saab
Company for $449,660 cash. The fair value of Saab’s identifiable
net assets was $375,570 on this date. Porsche Company decided to
measure goodwill impairment using the present value of future cash
flows to estimate the fair value of the reporting unit (Saab). The
information for these subsequent years is as follows:
Year
Present Value
of Future Cash Flows
Carrying Value of
Saab’s Identifiable
Net Assets*
Fair...
Exercise 1-2 Alpha Company is considering the purchase of Beta Company. Alpha has collected the following data about Beta: Beta Company Estimated Book Values Market Values Total identifiable assets $541,800 $734,700 Total liabilities 317,800 309,500 Owners' equity $224,000 Cumulative total net cash earnings for the past five years of $906,800 includes extraordinary cash gains of $64,800 and nonrecurring cash losses of $46,000. Alpha Company expects a return on its investment of 13%. Assume that Alpha prefers to use cash earnings...
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