Essay
Calculation of goodwill
Great Corporation is interested in purchasing Big World Company Ltd. The total of Big World's net income amounts over the past five years is $ 745,000. During one of those years, Big World reported a gain on discontinued operations of $ 93,000. The fair value of Big World's net identifiable assets is $ 684,000. A normal rate of return is 14%, and Great Corporation wants to capitalize excess earnings at 19%.
Instructions
Calculate the estimated value of goodwill.
Correct Answer:
Verified
Correct Answer:
Verified
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